Business is largely dependent on government orders of solar pumps. For the past year and a half because of raw material price increase business was not sustainable. It was not executing the current order book at hand leave alone new order. It was waiting for price increases and new rates have come this quarter.
The current order book of the government for the next two years is 24,000 crore and 8,000 crore is up for grabs for Shakti as per the concall. Business turnarounds Q2 Fy2023 as per concall. But management clearly said they will talk next year what they can achieve. They surely have the capacity for doing 3500-4000 crore a year. Management talks about double digit margins. If you look at past history margins are 14-18 % in the best of times. So you are talking Fy25 with 4000 cr revenues and with a 12.5% margin you are looking at a PAT of 350cr in the best case scenario. Exit PE of about 12. Clearly looks like a 4x opportunity in the bestest case if you know what I mean.
I would highly suggest listening/reading to the latest concall for a clear understanding of the market size and shakti’s share in the same. Here is the link – Concall Q4 FY22-23.
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