Shakti Pumps' Q2 margin slips as costs fall slower than revenue
Consolidated operating margin narrowed 1.07 percentage points sequentially, while other income contributed 25.14% of pre-tax profit.
Filed 23 Oct 2026, 18:25 IST · after market close · Shakti Pumps (India) Ltd (SHAKTIPUMP)
Key takeaways
- Consolidated operating margin narrowed 1.07 percentage points sequentially to 8.58% as expenses declined less than revenue.
- Net profit fell 25.35% sequentially, while a 5.14-percentage-point reduction in the tax rate partly cushioned the decline.
- Management attributed margin pressure to lower realisations, higher raw-material costs and logistics expenses, even as Q2 solar-pump installations grew 7.0% year on year.
Price around the results
Revenue decline outpaced the operating-profit fall
Consolidated revenue declined 13.12% sequentially, while expenses fell 12.09%, leaving costs growing faster than revenue on a quarter-on-quarter basis. That mismatch reduced operating profit by 22.73% and narrowed operating margin by 1.07 percentage points to 8.58%. Management said lower realisations, higher raw-material costs and elevated logistics expenses affected margins.
Tax relief softened a weaker pre-tax result
Pre-tax profit fell 30.29% sequentially as interest expense rose 29.38%, adding pressure below the operating line. The tax rate fell 5.14 percentage points to 22.25%, which partly cushioned the 25.35% decline in net profit. Other income accounted for 25.14% of pre-tax profit, making it a material contributor to reported earnings quality this quarter.
Margin trails the Industrials peer median
Shakti Pumps' 8.58% operating margin was 2.45 percentage points below the 11.03% median for the 25 Industrials peers that had reported the same quarter. The company ranked eighth from the bottom on this measure.
Management links growth plans to capacity and state programmes
Management said solar-pump installations rose 7.0% year on year in Q2FY27 and that order inflow from Magel Tyala and other state programmes continued. It said PM-KUSUM 2.0, expected to be announced during the ongoing quarter, could create further order opportunities. The company said it is investing around Rs 17,000 million in manufacturing and backward integration; management also said 0.5 GW of solar-module capacity began trial production in October 2026, while the 2.2 GW solar-cell facility is planned for commissioning by FY28. Management identified order-book execution, margin improvement, cash conversion and on-schedule capacity commissioning as priorities.
Results were filed after the market close
The consolidated results were filed after market close on 23 October 2026. This note therefore focuses on the reported quarter rather than a post-results market reaction.
Q2FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ |
|---|---|---|---|
| Revenue | ₹746 cr | ₹859 cr | -13.12% |
| Other income | ₹12 cr | ₹10 cr | +20.41% |
| Expenses | ₹682 cr | ₹776 cr | -12.09% |
| Operating profit | ₹64 cr | ₹83 cr | -22.73% |
| Operating margin (%) | 8.58% | 9.65% | — |
| Interest | ₹19 cr | ₹15 cr | +29.38% |
| Depreciation | ₹8 cr | ₹8 cr | +6.86% |
| Profit before tax | ₹50 cr | ₹71 cr | -30.29% |
| Tax | ₹11 cr | ₹19 cr | -43.37% |
| Net profit | ₹39 cr | ₹52 cr | -25.35% |
| EPS (₹) | ₹3.12 | ₹4.18 | -25.36% |
Operating margin of 8.58% compares with a Industrials sector median of 11.03% across 25 peers that have reported Q2FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- Solar pump installations increased 7.0% year on year in Q2 FY27 and 29.3% in H1 FY27.
Guidance & outlook
- PM-KUSUM 2.0 is expected to be announced during the ongoing quarter, creating an opportunity for further orders.
- The company expects continued order inflow from Magel Tyala and other state programmes.
- The company’s priorities are efficient order-book execution, margin improvement, stronger cash conversion and on-schedule capacity commissioning.
Expansion
- The company is investing around ₹17,000 million to strengthen manufacturing and backward integration.
- A 0.5 GW solar module capacity commenced trial production in October 2026, while the 2.2 GW solar cell facility is planned for commissioning by FY28.
- The phased ₹17,000 million capex programme is intended to double core capacity and add solar cell and module manufacturing.
New products
- The company’s EV subsidiary designs motors and controllers entirely in-house.
New initiatives
- The company is addressing margin pressures through cost optimisation, operating efficiencies and disciplined execution.
- The company is diversifying into solar rooftop and EV motors, controllers and chargers.
- The company has invested ₹920 million in its EV subsidiary against planned capex of ₹1,140 million.
Problems & risks
- Margins moderated because of lower realisations, higher raw material costs and elevated logistics expenses linked to geopolitical conditions.
- Logistics costs remain elevated because of ongoing geopolitical tensions.
- Lower realisations affected select Magel Tyala Saur Urja Yojana orders that represented a large share of H1 revenue.
What to watch
- Whether operating margin moves up from 8.58% as management pursues cost optimisation and operating efficiencies.
- Whether the 0.5 GW solar-module line moves beyond trial production after starting in October 2026.
- Progress on the Rs 17,000 million phased capex programme and the planned 2.2 GW solar-cell facility.