Shakti Pumps (India) Limited has commenced trial production at its 500 MW solar panel facility. This strategic move aims to reduce reliance on external sourcing and capitalize on the growing rooftop solar market. The company anticipates this expansion, coupled with ongoing cost optimization efforts, will lead to improved EBITDA margins in the coming quarters. The 2.2 GW facility is slated for completion in FY28, promising significant future revenue contributions.
Shakti Pumps Expands Solar Manufacturing Capabilities
Shakti Pumps (India) Limited is moving forward with its strategic expansion into solar panel manufacturing, announcing the commencement of trial production at its new 500 MW solar panel facility. This development marks a significant step towards vertical integration, aiming to reduce dependency on external suppliers and to accelerate growth in the rooftop solar business.
Capacity Expansion and Future Outlook
The company stated that the 500 MW solar plant facility is expected to commence commercial production within the next one to one-and-a-half months. This will allow Shakti Pumps to gradually replace externally sourced solar panels with its own branded panels, offering a dual advantage: accelerating the rooftop business from customers who were previously hesitant and generating additional sales from export customers seeking integrated solutions. The larger 2.2 GW facility is scheduled for completion in FY28, with revenue contributions expected from March 2028 onwards.
Margin Improvement Prospects
The expansion into in-house solar panel manufacturing is a key component of Shakti Pumps’ strategy to enhance its profitability. While the full benefits of margin expansion are not immediate due to the ongoing process of approvals, testing, and operational stabilization, the company is optimistic. Management highlighted that they expect to see tangible results in the coming quarters. Despite a recent 3% increase in raw material prices, the company has managed to offset 2% through effective cost management and Kaizen initiatives, maintaining its EBITDA.
Financial Highlights and Government Schemes
The company’s management provided updates on its financial performance, noting a strong Q2 FY27 with INR 543 crores in solar EPC and INR 95 crores in exports. While acknowledging the delay in the PM-KUSUM 2.0 scheme, Shakti Pumps has maintained its growth momentum through other avenues, including government schemes like the Maharashtra Government’s Magel Tyala scheme. The company is also focused on increasing cash sales in the open market and catering to domestic customers requiring solar pumps.
Capex and Debt Management
Shakti Pumps has a total capex plan of INR1,700 crores, with approximately INR200 crores already spent on the 2.2 GW solar cell plant. The company anticipates spending around INR400 crores in the second half of the fiscal year. Debt levels, which stood at approximately INR 830 crores, have reduced to below INR500 crores following the receipt of previously delayed collections.
Source: BSE
