Multibagger stock: Shakti Pumps share price tumbles 13% today; here's why

Multibagger stock: Shakti Pumps (India) Ltd shares plunged 13 per cent in Monday’s trade after the company said its December quarter performance was hit by a calibrated moderation in execution, primarily in Maharashtra, aimed at addressing elevated receivable levels and managing overall balance sheet strength.

The manufacturer of solar water pumps, submersible pumps, industrial pumps, and residential water systems said its net profit declined to Rs 31.70 crore in the December quarter from Rs 104.10 crore a year earlier, while sales contracted to Rs 5,510 crore from Rs 6,488 crore in the corresponding period.
The stock fell 12.86 per cent to hit a low of Rs 558 apiece. The multibagger stock has fallen 32.82 per cent in the past one year, trimming its two-year and three-year returns to 130.61 per cent and 722.59 per cent, respectively. 

In an stock exchange filing, Chairman Dinesh Patidar said the Shakti Pumps has deliberately paused execution of orders aggregating approximately Rs 200 crore to assess and stabilise the receivables position.

Revenues, he said, were initially expected to remain stable to marginally improve but the approach resulted in lower revenue recognition on a sequential and YoY basis and impacted Ebitda margins. 

"However, it was a conscious decision to prioritise working capital discipline over near term revenue growth," Patidar said.

The Shakti Pumps Chairman said margins during the quarter were affected by a combination of lower realisations of around 4 per cent in Magel Tyala orders, sustained increase of around 2 per cent in raw material prices like copper, steel, and solar panels, and higher employee costs. 

"Additionally, a portion of the raw material consumed during the quarter was sourced from inventory accumulated in Q2FY26, when input prices were at elevated levels, which further impacted margins. The increase in manpower expenses reflects one time cost impact arising from implementation of the new labour code amounting Rs 4.4 crore, as well as investments in new and emerging segments which are currently in the build up phase and are expected to contribute to revenues from the next financial year," he said. 

Patidar said export revenues continued to perform well and are expected to grow at a healthy pace for the full year. He felt that despite incremental revenue recognition in Q3FY26, trade receivables remained broadly stable compared to the previous quarter, reflecting improved collections and effective working capital management.

Shakti Pumps has an order book of Rs 2,100 crore (inclusive of GST), diversified across multiple states, with Maharashtra and Karnataka being key contributors. 

"Payments from Maharashtra have started to improve, with funds sanctioned and released by the Asian Infrastructure Investment Bank (AIIB) as well as the state government, following which the company has resumed execution in the state. Execution in Karnataka, where the Company has secured its first order, will be closely monitored with respect to payment timelines, and work execution will be aligned accordingly," Patidar said.

He said Shakti Pumps expects execution momentum to improve in the fourth quarter, which is anticipated to be the highest revenue quarter ever, though some revenue is expected to spill over into subsequent quarters. 

"While margins for the current year are likely to remain impacted due to lower realisations and cost pressures, the Company remains focused on consolidating its balance sheet, maintaining disciplined execution, and ensuring sustainable growth without compromising long term value creation," he said.