Shakti Pumps growth rests on PM-KUSUM rollout and DCR-led margin recovery

Investment View and Valuation

Ajcon Global Services Limited reiterated its BUY recommendation on Shakti Pumps (India) Ltd following the Q1FY27 results announced on July 27, 2026. The broker revised its target price to Rs 595, valuing the company at 25 times its FY27E EPS of Rs 23.81. The target implies an 18 per cent upside from the CMP of Rs 503.20 as of August 17, 2026.

Ajcon considers the medium-term growth thesis intact despite near-term margin softness. Key supports include the likely rollout of PM-KUSUM 2.0, Shakti Pumps' approximately 25 per cent share of the PM-KUSUM market, DCR solar-manufacturing backward integration, and early diversification into rooftop solar, retail sales and EV motors.

Q1FY27 Financial Performance

Q1FY27 revenue increased 37.9 per cent year-on-year to a record Rs 859 crore, driven by solar-pump execution. EBITDA was Rs 83 crore, with the EBITDA margin at 9.6 per cent. The margin was broadly stable quarter-on-quarter but lower year-on-year.

The year-on-year EBITDA reduction of Rs 61 crore reflected 4 per cent lower sales realisations, equivalent to Rs 25 crore, and 6 per cent higher raw-material costs, equivalent to Rs 36 crore. PAT growth and the improvement in PAT margin were aided by cost management. Per-pump realisation was broadly stable quarter-on-quarter at Rs 2.48 lakh, with the small movement driven by the mix between PM-KUSUM and Magel Tyala orders rather than pricing.

New Business Initiatives and Exports

Newer businesses showed initial momentum but remain relatively small. Cash and retail revenue was Rs 24 crore in Q1FY27, supported by an expanding dealer network. Rooftop solar revenue increased to Rs 8 crore from Rs 2 crore in Q1FY26, supported by demand for Shakti inverters.

EV Motors and Controllers remained in the customer trial, validation and testing stage. Management expects meaningful revenue contribution only from FY28, once bulk orders begin.

Export performance remained stable despite Middle East geopolitical uncertainty. Management indicated fresh export orders of about Rs 100 crore each quarter. The Uganda project was completed, and the company is pursuing similar opportunities in Africa. It is also using 40 HP solar-pump demonstrations in Saudi Arabia and 100 HP units in Africa to develop larger-HP export demand.

Order Book and Growth Outlook

Management cited an outstanding order book of Rs 1,000 crore as of July 22, 2026, providing execution visibility for the next two quarters.

Management expects PM-KUSUM 2.0 to bring fresh tenders and order inflows after its launch. It reiterated a FY29 revenue aspiration of Rs 5,000 crore across solar pumps, rooftop solar, exports, EV motors and integrated solar manufacturing.

DCR Backward Integration and Capex

The key strategic capex is the DCR cell and module expansion. Management expects the 0.5 GW DCR facility to be commercialised by September 2026 and the 2.2 GW expansion by September 2027. Pump-manufacturing expansion is expected by November 2026.

• The 0.5 GW facility is expected to ramp from 40–50 per cent utilisation in its first month to about 85 per cent thereafter.
• Backward integration is expected to improve supply reliability and raise EBITDA margins by about 3 per cent.
• Total planned capex of Rs 1,500–1,700 crore is expected to be completed by September 2027.
• Approximately Rs 800 crore is planned for FY27, with the balance to be spent in FY28.

Key Risks

• Persistent geopolitical inflation in raw materials.
• Delay in PM-KUSUM 2.0 clearance.
• Lower realisations from state tenders.
• Competition and working-capital pressure.

Trade receivables increased to Rs 1,799 crore as of June 30, 2026, from Rs 1,276 crore as of March 31, 2026. Management described receivables as under control and noted that Maharashtra payments had started. However, Ajcon flags working-capital intensity as a risk as revenue scales.