Shares of Shakti Pumps (India) Ltd. experienced a sharp surge of 16.52 percent in Wednesday's trading session, hitting a high of Rs 414.80. Despite this notable daily recovery, the stock's year-to-date (YTD) performance shows a substantial decline, with shares still down 46.06 percent.
The significant de-rating of Shakti Pumps' stock has been primarily linked to the delayed announcement of the PM-KUSUM 2.0 scheme, as noted by Choice Institutional Equities. The brokerage also highlighted persistent margin pressure on the company, stemming from rising operational costs and lower realisations from its products.
Brokerage Revises Forecasts Amid Scheme Delays
Choice Institutional Equities maintains a cautious outlook for the sector, citing a scarcity of new orders and the limited implementation of state-specific schemes. The brokerage reported that Shakti Pumps' Q2 FY27 Profit After Tax (PAT) was broadly in line with their estimate of Rs 40 crore.
However, factoring in a delayed launch and slower ramp-up of the KUSUM 2.0 scheme, Choice has revised its financial estimates for the company. Revenue forecasts have been cut by approximately 10 percent for FY28E and 11.5 percent for FY29E. Furthermore, a rationalisation of EBITDA margins has led to an overall reduction of about 25 percent in PAT for both FY27E and FY28E.
Looking ahead, Choice Institutional Equities anticipates an EBITDA margin of 15 percent by FY29E, predicated on scaling up captive module supply and a restoration of order inflow once KUSUM 2.0 is fully implemented. The brokerage projects a Revenue/EBITDA/PAT Compound Annual Growth Rate (CAGR) of 14.6 percent, 13 percent, and 13.3 percent, respectively, over the FY26–FY29E period.
Analyst Retains 'ADD' Rating with Reduced Target
Despite the cautious stance, Choice Institutional Equities has retained its 'ADD' rating for Shakti Pumps. However, it has significantly cut its target price for the stock to Rs 410 per share, down from the earlier Rs 640, reflecting the revised outlook and ongoing uncertainties.
From a technical perspective, AR Ramachandran, a Sebi-registered research analyst at Tips2trades, indicated that Shakti Pumps' stock exhibits a bullish trend on daily charts, with strong support identified at Rs 375. Ramachandran suggested that a sustained daily close above the resistance level of Rs 415 could potentially trigger an upward movement towards the Rs 447 mark in the near term.