Financial Performance Q2 FY27

  • Total Income: INR106.43 crores, representing 32.89% year-on-year growth
  • EBITDA: INR10.28 crores, with 24.75% year-on-year growth
  • Net Profit: INR4.48 crores, registering 5.55% year-on-year growth
  • EBITDA Margin: 9.66% (declined from 10.29% in previous year)

H1 FY27 Performance Highlights

  • Revenue growth of 25.14% year-on-year
  • PAT increased by only 7% year-on-year
  • Lower profit growth attributed to increased raw material costs and higher interest costs due to increased working capital requirements

Business Performance Update

Solar EPC Business
  • Secured 2 repeat orders from MSEDCL under PM-KUSUM scheme:
  • July 2026: INR23.6 crores for 1,000 pumps
  • September 2026: INR47 crores for 2,000 pumps (largest single solar EPC order in company history)
  • Total FY27 order intake: INR82.4 crores for 3,500 solar pumps
  • Total orders since empanelment in Maharashtra (August 2025): 5,000 pumps
  • Execution ongoing with majority revenue recognition expected by end of Q3 FY27
  • Exploring opportunities in states beyond Maharashtra and Gujarat once PM-KUSUM 2 is announced
Micro-Irrigation Business
  • Focus on increasing non-subsidy business through commercial sales and exports
  • Current non-subsidy contribution: approximately 10% of micro-irrigation business
  • Expecting improvement as Ahmedabad manufacturing facility ramps up with progressive backward integration

Margin Pressures and Outlook

  • EBITDA margin decline primarily due to sharp increase in raw material costs (HDPE and LLDPE)
  • Expecting margin improvement in H2 FY27 due to:
  • Expected revision in benchmark costs for micro-irrigation by central and state governments (estimated 1 percentage point improvement)
  • Ramping up of Ahmedabad manufacturing facility (estimated 0.5 percentage point improvement by March 2027)
  • Total expected margin benefit of 1-1.5% over 3 years from Ahmedabad facility

Working Capital and Debt Management

  • Micro-irrigation working capital cycle: typically 6-8 months, currently at 8 months
  • Solar pumps business cycle: 3-4 months
  • Expecting working capital cycle improvement to 5-6 months by end of FY27
  • Consolidated borrowing: Approximately INR89 crores in FY26 with INR77.72 crores due within 1 year
  • Majority debt is working capital revolving facility with actual yearly repayment less than INR10 crores

Contingent Liabilities

  • Contingent liability: INR15.20 crores in FY26
  • Primarily consists of performance bank guarantees provided to government authorities (typically 1% of total sales)
  • These are 5-year warranties on micro-irrigation systems

Strategic Priorities for H2 FY27

1. Timely execution of solar pump orders already won

2. Ramping up Ahmedabad manufacturing facility to improve margins through in-house component manufacturing

3. Improving mix of micro-irrigation business by increasing share of non-subsidy business

Segment Margin Comparison

  • Micro-irrigation business margin: currently 7-8%
  • Solar pumps business margin: currently 10-11%
  • Last year both segments had similar margins

New Product Initiatives

  • Launched automation solutions for existing drip irrigation fields
  • Expanding scope from valve control to time-based or volume-based irrigation services
  • Focus on improving revenue from existing customer base through value-added services

Industry Dependence

  • Industry remains heavily dependent on government subsidies (approximately 90% of market)
  • Strategy focuses on growing non-subsidy segments including domestic commercial sales and export markets