What Led to a Decline in Q2 Profit for Shakti Pumps?

Indian solar pump manufacturer Shakti Pumps recently announced its quarterly results for the current financial year (FY26). While the company reported a minor increase in revenue, both on a yearly and sequential basis, it also reported a decline in its total profit on a year-over-year (YoY) and quarter-over-quarter (QoQ) basis. But what led to this drop in profit margins?

Data shared by the company revealed that it suffered a 10.5% dip in Profit After Tax (PAT) on a YoY basis and a 6.3% decline in PAT on a QoQ basis. Even before the investors’ call, the company had hinted at the reasons behind the reduced PAT margins despite higher revenue. The profit drop has been punished by the markets on Monday, as its shares slumped over 8%, indicating the risks of promising consistency, as management has been doing for the past few quarters, and then falling short. 

Monsoon To Raw Material Issues 

The company’s top management attributed the decline primarily to an extended monsoon, which affected installations. Additionally, a surge in prices of raw materials such as copper, steel, and solar panels led to increased production costs.

“Revenue growth was primarily impacted due to the extended monsoon, which affected installations during the period. Prices of key raw materials such as copper, steel, and solar panels increased by around 3–4% due to volatile market conditions, thereby impacting margins,” the company said.

It also mentioned that its solar pump business was affected by GST 2.0, which led to changes in the scope of final orders in some regions.

Dinesh Patidar, Chairman of Shakti Pumps, however, maintained an optimistic outlook with a Rs 1300 crore order pipeline, and faster pace of depliyment expected in the next quarter. 

“Despite certain headwinds in the first half of FY26, including extended monsoon conditions and raw material price inflation, we delivered one of the highest quarterly revenues in our history. Order inflows from Maharashtra have been particularly encouraging, with the state leading in execution and expected to contribute further through large upcoming projects. Although some anticipated orders from states such as Madhya Pradesh and Rajasthan are yet to be released, our overall pipeline remains robust, supported by active bidding and strong relationships with key stakeholders,” Patidar said.

During the last investors’ call, the company sought to allay investor concerns and highlighted its expectation of better performance in Q3. The management stated that it hadreduced its receivable days from 178 days in FY24 to 152 days in FY25, and plans to further reduce it to 120 days by FY26.
Since the company is heavily dependent on payments from government bodies for its solar pump projects, delayed payments have been a recurring challenge affecting its financial performance within fixed time periods.

Funding & Growth Trajectory

The company also announced that it is raising ₹292.6 crore through a Qualified Institutional Placement (QIP) to partially fund its solar DCR cell and solar module manufacturing units. This initiative could help it control raw material costs once operations begin.

Earlier, at the end of Q1, the firm had set a target of 25%–30% revenue growth in FY26, aiming to sustain this trajectory over the next 3–4 years. However, based on H1 and Q2 results, achieving this target appears to be more challenging than expected.

What’s Working Well for the Firm?

The Indore-based company is witnessing growth in business segments beyond solar pumps. It reported ₹102.9 crore in revenue in Q2 FY26 and ₹200 crore in the first half (H1) of FY26 from its exports business. The company currently has projects inHaiti, Uganda, Bangladesh, and Nepal, and is also seeing growing demand from the United States, the Middle East, and Africa.

Additionally, Shakti Pumps has entered the rooftop solar segment in three new states —Rajasthan, Uttar Pradesh, and Maharashtra. It now boasts a strong order book of ₹1,300 crore from several states, primarily comprising off-grid and grid-connected solar pumps.