Shakti Pumps Explains Reasons Behind Its Dip In Q3 Revenues

Indian solar pump manufacturer Shakti Pumps has explained the decline in its revenue collection and net profit in the third quarter (Q3) of FY2025-26, with the company’s leadership outlining multiple factors that impacted performance while reassuring investors about its growth strategy. During its latest earnings call, the company emphasised that several strategic decisions taken to strengthen the balance sheet and manage working capital had a short-term impact on revenue and margins.

Ramesh Patidar, Managing Director of the company, acknowledged that the quarterly performance was below expectations. He said the company deliberately slowed execution of certain orders, particularly in Maharashtra, to maintain working capital discipline and protect the balance sheet. This decision resulted in lower revenue recognition and margin pressure during the quarter. Shakti Pumps, which has executed several solar irrigation projects in Maharashtra, had earlier faced criticism over long payment cycles from government agencies, though the company said payment timelines have now started improving.

"Our reported financial performance for the quarter was below expectations as we focused on strengthening the company for the long term through disciplined execution, especially in Maharashtra, to manage elevated working capital levels and protect the balance sheet. As part of this approach, we temporarily slowed execution of certain orders, which resulted in lower revenue recognition and margin pressure during the quarter, he said.

The company reported revenue of ₹550.99 crore in Q3, marking a 15% year-on-year decline. The firm also reported a 69.5% year-on-year fall in net profit.

Cost Pressures and Working Capital Discipline

The company attributed the weaker performance to the following factors:

• Lower realisations and continued increases in raw material prices such as copper, steel and solar panels

• Higher employee costs and additional inventory procurement

• One-time manpower cost due to the implementation of the new labour code

• Investments in emerging businesses and working capital requirements

Despite these pressures, the solar pump company management said working capital has begun stabilising due to improved collections and disciplined execution. The company remains confident about maintaining a strong and diversified order book across Maharashtra, Karnataka, Madhya Pradesh, Jharkhand, Uttar Pradesh and Haryana. Payments in Maharashtra have started improving following fund releases supported by multilateral funding and state government execution. The company has resumed execution in Karnataka with its first large order and is expanding into southern markets.

Order Book Strength and Export Growth

Export business grew about five percent during the quarter, supported by strong retail exports and opportunities from trade agreements in major international markets such as the United States and Europe. Emerging businesses also delivered steady growth, while the solar segment is strengthening dealer network positioning and post-commissioning contributions. The company currently has an order book of around ₹2,100 crore, with about ₹200 crore worth of orders that had been paused earlier now resuming execution.

Expansion and Backward Integration Plans

The company highlighted the following capacity expansion and diversification plans:

• Pump capacity expansion expected to be fully operational by August

• Solar module capacity of 0.5 GW expected soon

• Solar cell and module project expected to be operational around April

• EV motor and controller business under development, with testing completed and customer approvals underway; commercial sales expected next year