Shakti Pumps Q1 FY26 Concall Highlights: Weak Quarter, but Optimism for H2 FY26 Recovery

Shakti Pumps (India) Ltd. reported a disappointing Q1 FY26 performance, missing both revenue and margin expectations. However, the management commentary during the earnings call offered insights into future growth drivers and challenges. 1. Q1 Performance Recap: Weak Start to FY26 Revenue Miss: The company reported revenues significantly below internal targets due to a sharp decline in government orders, especially under the PM-KUSUM scheme. Margin Pressure: EBITDA margins came under pressure due to poor operating leverage and limited high-margin order inflow. 2. Heavy Dependence on Government Orders Nearly 100% of revenue in Q1 came from government schemes like PM-KUSUM. Company expects order inflow to pick up in Q3–Q4 after elections and budget implementation. Shakti is confident that FY26 will still be a growth year, with most of the action expected in the second half. 3. Strategic Capex to Reduce Dependence Ongoing capex of ₹300–400 crore will diversify the business into: Backward integration (solar cells & modules under DCR norms) EV segment (e-rickshaw, battery packs) Rooftop solar systems Target: Reduce government scheme dependency and expand into private sector and export markets. 4. Focus on Backward Integration Shakti is setting up a solar DCR cell and module plant, helping: Control costs Ensure compliance for DCR-based government orders Expand into rooftop solar installations Capacity: Initial phase of 1.2 GW, with potential to scale to 4–5 GW. 5. EV Business Update Targeting the 2-wheeler and 3-wheeler EV ecosystem. Focus on: EV motors Battery packs Motor controllers Still in investment phase; commercial volumes expected in FY27. 6. Rooftop Solar Business Already present in solar pumping; now entering rooftop solar for residential and commercial clients. Aims to leverage pan-India installer network to scale up. 7. Margin Outlook Q1 margins were weak, but management expects improvement in H2 FY26. Better operating leverage from: Higher volumes Order inflows from KUSUM and new product lines 8. Execution Challenges Risk of execution delays in: Government scheme rollouts EV market acceptance Capex ramp-up (DCR plant, rooftop solar) Management remains confident but cautions investors to expect a gradual recovery over the next 2–3 quarters. Conclusion: Near-Term Pain, Long-Term Potential Shakti Pumps is undergoing a transition from being a government-order dependent solar pump company to a diversified clean energy solutions provider. While Q1 FY26 was weak, the company’s strategic investments in backward integration, rooftop solar, and EV components offer a roadmap for medium to long-term growth. Investors should track: Order inflows under PM-KUSUM Progress on DCR cell plant Rooftop and EV business traction in FY27