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Business News/ Markets / Stock Markets/  Multibagger Stock: Shakti Pumps yielded 515% returns in 13 months, gained over 1690% in 4 years

Multibagger Stock: Shakti Pumps yielded 515% returns in 13 months, gained over 1690% in 4 years

Shakti Pumps' stock price has surged by 515% in the last 13 months, driven by substantial order acquisitions and strong financial performance. The company holds a dominant position in the Indian pump industry with a 26% market share in the domestic solar pump market under the PM KUSUM scheme.

Shakti Pumps: The stock's long-term performance has been impressive, registering a remarkable gain of 1694% over the last four years. (Pixabay)Premium
Shakti Pumps: The stock's long-term performance has been impressive, registering a remarkable gain of 1694% over the last four years. (Pixabay)

Shares of Shakti Pumps, the country's leading manufacturer of solar pumps and motors, have been on an upward roll over the last 13 months, producing a stellar performance and significantly enhancing shareholder wealth in a relatively brief timeframe.

The company, primarily focused on the production of pumps and motors of various types, has witnessed a consistent uptrend in its stock price since April 2023, starting at 404.40 and currently trading at 2,492, yielding an impressive return of 515%.

This outstanding growth is largely attributed to Shakti Pumps' substantial order wins and strong financial performance, instilling investor confidence and driving the stock price to unprecedented levels. On March 22, the stock reached a new pinnacle, touching an all-time high of 2,955 apiece.

Also Read: Mauritius-based FII buys stake in this small-cap stock during Q4FY24

Zooming out, the stock's long-term performance has been even more impressive as it registered a remarkable gain of 1694% over the last four years.

Recognised as a leading domestic manufacturer in the Indian pump industry, Shakti Pumps holds a dominant market position with a 26% share in the domestic solar pump market under the PM KUSUM scheme - an initiative to transform the Indian agriculture sector.

The company boasts a diversified customer base comprising government entities, solar original equipment manufacturers (OEMs), and industries, ensuring a low customer concentration mix, with over 1 lakh pumps installed, according to the company's recent exchange filing. 

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Solid growth

The company reported a stellar performance for the March ending quarter (Q4 FY24), with its consolidated profit after tax (PAT) witnessing a 40-fold surge to 89.70 crore, attributed to robust revenue growth.

Revenues experienced a significant upsurge, soaring over threefold to 609.3 crore from 182.7 crore in the year-ago quarter. For FY24, the company's PAT jumped to 141.7 crore from 24.1 crore in FY23, while revenue surged by 41.7% to 1,370.7 crore from 967.7 crore in FY23.

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The company secured several orders during the quarter, including a contract worth 93 crore from the Maharashtra Energy Department Agency for the supply of 3,500 solar photovoltaic water pumping systems across various locations in Maharashtra, India. As of March 31, 2024, Shakti Pumps' order book stood at 2,400 crore, according to the company's Q4 earnings report. 

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Demand drivers in India's pump industry

India, primarily reliant on agriculture, boasts a robust agricultural sector marked by a consistent demand for pumps. This demand stems from diminishing groundwater levels and proactive governmental initiatives, including subsidised electricity and exemptions for solar water pumps. Such policies have fostered the adoption of independent irrigation systems, thereby fueling the need for water pumps.

Moreover, India's GDP is poised to soar to USD 15 trillion by 2030, with urbanisation accounting for 70% of this growth. This rapid urban expansion serves as a major catalyst for pump demand, as burgeoning cities and a swelling population necessitate enhanced sanitation infrastructure, further amplifying the requirement for pumps.

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Under the PM KUSUM scheme spearheaded by the government, it is anticipated that over 14 lakh solar pumps under Component B (off-grid pumps) and 35 lakh solar pumps under Component C (on-grid pumps) will be deployed, reflecting the nation's concerted efforts towards sustainable energy practices.

New Business: Electric vehicles segment

The company incorporated Shakti EV Mobility, which focuses on the production and distribution of EV motors, charging stations, battery management systems, electric control panels, smart electric control panels, VFDs, and related products. Initially targeting the two-wheeler and three-wheeler segments, the company is actively engaged in testing and developing additional offerings.

Recently, it achieved a significant milestone with the grant of a patent for its "Stack Assembly for Permanent Magnet Rotor." 

Also Read: Mahindra to invest Rs12000 crore in EV business till FY27

The future outlook for the new segment appears promising, given the bullish trajectory of the electric vehicle industry. Forecasts predict sales to soar to 10 million units by 2030, demonstrating a robust compound annual growth rate (CAGR) of 49% between 2022 and 2030.



Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.


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Published: 28 May 2024, 05:56 PM IST
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