Multibagger Shakti Pumps stock locks in 5% upper circuit for 3rd day in a row, gains over 2500% in 4 years

Shakti Pumps, a leading manufacturer of solar pumps and motors in India, saw its shares rise by 5% during intraday trading for the third consecutive session, reaching ₹4,516 each.

The recent surge followed a brief period of profit-taking, as investors responded positively to the company's strong June quarter results, which exceeded market expectations.

For the quarter ending June 2024, the company reported a significant increase in consolidated profit after tax (PAT), reaching ₹92.6 crore, up from ₹1.0 crore in the same period the previous year, and representing a sequential improvement of 3.3%.

Revenues increased more than fivefold to ₹567.6 crore from ₹113.1 crore in the year-ago quarter. The company's EBITDA rose to ₹135.9 crore in Q1 FY25, compared to ₹7.9 crore in Q1 FY24, with the EBITDA margin improving to 23.9% from 7.0%, driven by economies of scale and higher execution rates.

In its earnings release, the company announced that it had been awarded one more patent by the Government of India, bringing the total to 14 out of 29 applications. Additionally, Shakti Pumps' long-term credit rating was upgraded to IND A+/Stable, and its short-term rating was reaffirmed at IND A1 by India Ratings & Research.

As of June 30, 2024, Shakti Pumps reported an order book of ₹2,300 crore, as per the company's earnings filing. 

Specializing in the production of various types of pumps and motors, Shakti Pumps has seen a consistent rise in its stock price since April 2023, starting at ₹404.40 and currently trading at ₹4516, delivering an impressive return of 1017%.

This remarkable growth is primarily due to substantial order wins and robust financial performance, which have boosted investor confidence and driven the stock price to unprecedented levels. On July 08, the stock hit an all-time high of ₹4,690.

In the long term, the stock has achieved a remarkable gain of 2525% over the past four years.

Recognized as a leading manufacturer in the Indian pump industry, Shakti Pumps holds a dominant market position with a 25% share in the domestic solar pump market under the PM KUSUM scheme, an initiative aimed at transforming the Indian agriculture sector.

Through the PM Kusum Scheme, led by the government, it is estimated that there are over 14 lakh solar pumps under Component B (off-grid pumps) and 35 lakh solar pumps under Component C (on-grid pumps) to be installed.

India, primarily an agrarian economy, boasts a flourishing agricultural sector with a consistent demand for pumps. This demand is fueled by declining groundwater levels and supportive government policies, such as subsidized electricity and exemptions for solar water pumps, which encourage independent irrigation systems.

Moreover, with India's GDP expected to reach USD 15 trillion by 2030, urbanization is anticipated to drive 70% of this growth. The expanding urban areas and increasing population necessitate improved sanitation infrastructure, further elevating the demand for pumps.

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