Shakti Pumps Nov-24

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Questions and Answers

What was the order book value in the previous presentation?

  • INR 2400 crores
  • INR 2000 crores (correct)
  • INR 2600 crores
  • INR 1800 crores

What percentage of the work has been completed in the Uganda project?

  • 40% (correct)
  • 50%
  • 60%
  • 30%

What issue is being prioritized over business in Bangladesh?

  • Financial constraints
  • Political situation (correct)
  • Infrastructural challenges
  • Supply chain disruptions

What is the main concern about the order book, according to Dinesh Patidar?

<p>Problems with execution (C)</p> Signup and view all the answers

What does Dinesh Patidar imply about the future of new orders?

<p>They will come gradually with good growth. (D)</p> Signup and view all the answers

How did Deepak Purswani perceive the order book's incremental growth?

<p>He felt there might be a slowdown in growth. (B)</p> Signup and view all the answers

What is the significance of execution mentioned by the management?

<p>It is expected to be the primary focus. (A)</p> Signup and view all the answers

Who is tasked with providing more details about the Uganda project?

<p>Ramesh Patidar (D)</p> Signup and view all the answers

What can be assumed about the gross margin in the near term according to Dinesh Patel?

<p>It is dependent on raw material costs. (C)</p> Signup and view all the answers

Which factor is NOT mentioned as influencing gross margin in the discussion?

<p>Demand for solar modules. (B)</p> Signup and view all the answers

What specific aspect of the KUSUM scheme was highlighted by Ajay Surya in his question?

<p>The potential of Component C. (A)</p> Signup and view all the answers

What is the general trend of raw material prices observed over the last three quarters?

<p>They have expanded significantly. (D)</p> Signup and view all the answers

Which of the following roles is associated with Shakti Pumps in relation to KUSUM Component C?

<p>Addressing agricultural pump needs. (B)</p> Signup and view all the answers

What is suggested regarding the future inflation of raw material costs, as per Dinesh Patel?

<p>It should not repeat as last year. (B)</p> Signup and view all the answers

What did Ramesh Patidar indicate about their business pipeline?

<p>It includes multiple projects in various countries. (C)</p> Signup and view all the answers

What can be expected in terms of guidance for gross margin as development progresses?

<p>They will be provided based on project developments. (D)</p> Signup and view all the answers

What was the revenue from operations reported in Q2 FY '25?

<p>INR634.6 crores (D)</p> Signup and view all the answers

What was the EBITDA margin in Q2 FY '25?

<p>23.4% (A)</p> Signup and view all the answers

What was the earnings per share (EPS) in H1 FY '25?

<p>INR96.9 (B)</p> Signup and view all the answers

What percentage increase in revenue was reported for H1 FY '25 compared to H1 FY '24?

<p>3.5x (D)</p> Signup and view all the answers

What did the PAT margin increase to in Q2 FY '25?

<p>16% (C)</p> Signup and view all the answers

How much did EBITDA increase in Q2 FY '25 compared to Q2 FY '24?

<p>INR148.7 crores (D)</p> Signup and view all the answers

What is the current credit rating of the company?

<p>A- stable (A)</p> Signup and view all the answers

Which factor contributed significantly to the EBITDA margin expansion?

<p>Higher execution of orders and economies of scale (C)</p> Signup and view all the answers

What is the average price of the pump mentioned in the discussion?

<p>INR 3.25 lakh (D)</p> Signup and view all the answers

What is implied to influence the future pricing of the solar pumps?

<p>Technological advancements (A)</p> Signup and view all the answers

By what date must Kusum component B be executed according to the dialogue?

<p>31st March 2026 (A)</p> Signup and view all the answers

What could potentially decrease the margin for Shakti Pumps in the future?

<p>Changes in crude oil prices (D)</p> Signup and view all the answers

What is necessary for the business to become sustainable according to Dinesh Patidar?

<p>Advances in solar technology (C)</p> Signup and view all the answers

What does Ajay Surya inquire about concerning the rate card for Kusum component B?

<p>If the rate card remains the same (D)</p> Signup and view all the answers

What factor does Dinesh Patidar suggest will not provide correct information about pump pricing?

<p>Technology advancements (C)</p> Signup and view all the answers

What is the selling price of the 3HP pump mentioned in the exchange?

<p>INR 3.25 lakh (B)</p> Signup and view all the answers

What is the projected peak revenue from the new capacity according to Dinesh Patel?

<p>INR5000 crores (A)</p> Signup and view all the answers

How long is it expected to take before the new capacity is completely commenced?

<p>2 years (D)</p> Signup and view all the answers

What minimum revenue guideline was set for the next quarter?

<p>INR500 crores (A)</p> Signup and view all the answers

What percentage growth was mentioned as guidance in the last conference call?

<p>30% (C)</p> Signup and view all the answers

What did Dinesh Patidar mention about the company's capacity concerns?

<p>They have already planned solutions (A)</p> Signup and view all the answers

What was the revenue achieved last quarter as mentioned by Dinesh Patidar?

<p>INR640 crores (C)</p> Signup and view all the answers

How does Dinesh Patidar feel about the company's capacity in the coming quarters?

<p>It will expand (A)</p> Signup and view all the answers

What is indicated about the company's expertise as expressed by Dinesh Patidar?

<p>They are becoming experts in exhibitions (C)</p> Signup and view all the answers

What is the total revenue of Shakti Pumps (India) Limited after the new capacity is added?

<p>INR5,000 crores (C)</p> Signup and view all the answers

What is the expected growth margin range for Shakti Pumps in the next quarter?

<p>35% to 40% (D)</p> Signup and view all the answers

What is the minimum EBITDA margin guideline set by the management board?

<p>16% to 18% (D)</p> Signup and view all the answers

How much outstanding amount is reported for the last two quarters?

<p>INR1,200 crores (D)</p> Signup and view all the answers

How many orders are received from Rajasthan each quarter?

<p>INR100 crores (C)</p> Signup and view all the answers

What is the order value expected for the next year mentioned by Dinesh Patel?

<p>INR1,800 crores (B)</p> Signup and view all the answers

What is the historical trend of outstanding receivables at the end of each quarter?

<p>Around 1.5 quarters of revenue (A)</p> Signup and view all the answers

How much was the order received from UP in the last quarter?

<p>INR500 crores (B)</p> Signup and view all the answers

Flashcards

Revenue from Operations

Revenue generated from core business operations; it excludes non-operating income like interest or investments.

EBITDA

Earnings Before Interest, Taxes, Depreciation, and Amortization; a measure of a company's operating profitability.

EBITDA Margin

The ratio of EBITDA to revenue, representing the percentage of revenue remaining after covering operating costs.

PAT (Profit After Tax)

Net Profit After Tax; the profit remaining after deducting all expenses and taxes.

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PAT Margin

The ratio of PAT to revenue, representing the percentage of revenue remaining after deducting all expenses and taxes.

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Earnings Per Share (EPS)

A company's financial performance indicator that reflects the profitability of each share held by a shareholder.

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Credit rating

An independent assessment of a company's financial strength and creditworthiness.

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Order book

Refers to the outstanding orders that a company has received but not yet fulfilled.

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Slowdown in Order Book Growth

A decrease in the rate of growth for a company's order book.

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Order Book Execution

The process of successfully completing the tasks outlined in an order book.

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Project Execution Status

The progress made on a project, often measured as a percentage completed.

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Pipeline of Projects

Projects that a company hopes to secure in the future.

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Political Instability

Inconsistent or uncertain political conditions in a country, potentially impacting business operations.

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Project Hold

A decision to temporarily postpone or suspend a project due to unforeseen circumstances.

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Export Director

A company or individual responsible for overseeing and managing export activities.

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Capacity Expansion

The company plans to increase its capacity in the coming quarters to meet increasing demand.

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Revenue Target

The company expects to reach a minimum revenue of INR 500 crores in the next quarter, demonstrating consistent performance.

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Growth Projections

The company's current capacity will be sufficient to handle the projected growth until 2026.

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Peak Revenue from New Capacity

The company's new capacity is expected to contribute significantly to revenue, boosting it to INR 5,000 crores.

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Exhibition Expertise

The company focuses on developing expertise in exhibition-related services and aims to improve its delivery speed.

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Total Revenue Capacity

The amount of revenue a company expects to generate from its existing and new production capacity.

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Trade Receivables

The amount of money a company is owed by its customers for goods or services already delivered.

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TTM (Trailing Twelve Months) Revenue

The amount of revenue a company expects to gain over the next 12 months.

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Order Execution Rate

The rate at which a company can complete orders.

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Minimum EBITDA Margin Guideline

The minimum level of profitability that a company has committed to achieving.

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Order Inflow

The ongoing flow of new orders that a company receives.

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Grid-based solar pumping

The practice of using power from the electricity grid to run agricultural pumps during daytime.

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Kusum Component B

A government program aimed at promoting the use of solar-powered pumps in agriculture.

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Average price of Kusum component B pump

The cost of a 3 horsepower solar pump, generally around INR 3.25 lakhs.

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Solar pump system components

The components of a solar pumping system, including the pump, solar panels, and associated equipment.

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Technology's impact on solar pump prices

The effect of changes in technology on the price of solar pumps, leading to potentially lower costs in the future.

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Raw material cost impact on solar pumps

The potential for future changes in the price of raw materials used in solar pumping systems, leading to potentially lower prices.

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Global factors influencing solar pump prices

The influence of global factors, like the price of oil and decisions made by countries like Iran, on the price of solar pumps.

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Potential for rate revision in Kusum component B

The possibility of adjustments in the rate card for Kusum Component B, potentially leading to changes in the price of solar pumps.

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What is KUSUM Component C?

KUSUM Component C is a part of a larger scheme designed to promote solar power in agriculture. It focuses on providing solar-powered pumps for irrigation.

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What is FLS in the context of KUSUM Component C?

FLS refers to 'Flotation Linked Scheme', which is a type of solar-powered pump system where the pump is connected to the irrigation system.

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What is Shakti Pumps' role in KUSUM Component C?

Shakti Pumps is a company that manufactures pumps, particularly agricultural pumps. Their products are relevant to KUSUM Component C due to the focus on solar-powered irrigation.

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How does raw material cost affect the company's gross margin?

The profitability of the company depends on the cost of raw materials, particularly those used in solar modules. The company aims to keep the gross margin steady at 35%-40% despite potential fluctuations in material prices.

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What are the company's international expansion plans?

The company is working on expanding its business into multiple countries, using a similar model to the successful project in Uganda.

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What is the company's outlook on raw material costs in the near future?

The company believes that the price of raw materials, especially solar modules, is likely to remain stable in the near future. They anticipate a steady gross margin of 35%-40%, based on the current market trends.

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What information does the company reveal about its international projects?

The company currently has a few projects in its pipeline in different countries but prefers to provide specific details about their expansion plans only once they progress further.

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What is the current trend in the company's gross margin?

The company is seeing an expansion in gross margin due to increased sales and stable raw material prices. This positive trend has been consistent over the last three quarters and is expected to continue.

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Study Notes

Shakti Pumps Earnings Conference Call Q2 & H1 FY25

  • Date: October 28, 2024
  • Company: Shakti Pumps (India) Limited
  • Management: Dinesh Patidar (Chairman), Ramesh Patidar (Managing Director), Dinesh Patel (Chief Financial Officer), Ravi Patidar (CS & Compliance Officer)
  • Moderator: Rohit Anand (Ernst & Young LLP)

Financial Highlights Q2 FY25

  • Revenue: INR635 crores (record high, 3x last year's Q2)
  • Operating Profit: INR149 crores (increased from INR136 crores in Q1)
  • PAT: INR101 crores (16x last year's Q2)
  • EBITDA: INR148.7 crores, a margin of 23.4% (increase from Q1 and 10% in Q2 FY24).
  • H1 FY25 Revenue: INR1,202.2 crores (3.5x increase from H1 FY24).
  • H1 FY25 EBITDA: INR284.6 crores (23.7% margin)
  • H1 FY25 PAT: INR194.1 crores
  • Outstanding Orders: INR 1,800 crores as of Sep 24
  • 15th Patent granted: for VFD technology.
  • Bonus Issue: 5:1 recommended by the board.

Key Discussion Points

  • Management Highlights: Record-breaking revenue and profits, 3x growth in Q2 over last year's quarter. The growth is attributed to exports and domestic sales.
  • Capacity: Company has expanded capacity, plans for further expansion, but existing capacity is sufficient for INR2500 crores.
  • Raw Materials: Raw materials costs are stable, impacting the margins. Copper, stainless steel and solar panels are the key materials.
  • Solar Pumps: Successful order fulfillment, expanding presence in the retail sector.
  • Future Outlook: Strong orders, revenue exceeding INR1800 crores is targeted.
  • Order Book: Significant order book of INR1,800 crores.
  • Capacity: Sufficient production capacity to meet the current order book. Further expansion is expected, however the immediate capacity is not the bottleneck.
  • Margin Sustainability: Margins are stable despite raw materials cost.
  • Receivables: Concerns addressed regarding receivables, with money secured and consistent payment flow from state governments.

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