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Working margin, too, will stay wholesome, at 12-13% this fiscal and the subsequent, using on enhancing working leverage and with costs of key uncooked supplies remaining regular. This, together with regular working capital cycle and reasonable capital expenditure (capex), will help credit score danger profiles.
An evaluation of 5 massive agri pump makers, comprising almost 55% of the sector’s income estimated at Rs 6,000 crore for fiscal 2024, signifies as a lot. The sector is dominated by typical pumps (grid-connected and diesel pumps) which have 90% share, with the remaining comprising photo voltaic pumps.
Demand for agri pumps is basically resilient — a ‘good’ monsoon drives up farm incomes and pump purchases, buoyed by wholesome kharif crops, whereas a ‘poor’ monsoon necessitates the utilization of pumps to irrigate rabi crops. This was additionally seen within the present fiscal whereby income progress has been volume-driven, triggered by increased gross sales of typical pumps amidst uneven monsoons brought on by the El-Nino circumstances.
Says Anuj Sethi, Senior Director, CRISIL Scores, “Factoring regular monsoons in fiscal 2025, income progress for the trade will largely be quantity pushed. Whereas typical pumps might even see steady progress at 6-8%, photo voltaic pump volumes will develop at a quicker clip of 20% on-year, supported by anticipated discount in pump costs.” Photo voltaic pumps are anticipated to change into cheaper in fiscal 2025, as producers go on decrease costs of photo voltaic modules,
a key uncooked materials forming 65-70% of photo voltaic pump price.This, mixed with rising order flows below the PM KUSUM scheme which is ready to shut in March 2026; will drive the double-digit quantity progress expectations for subsequent fiscal. Regular progress in volumes of typical pumps coupled with worth of its key uncooked supplies — pig iron, metal and copper (forming 70-75% of complete price) remaining rangebound will maintain working profitability wholesome at 12-13% this fiscal and the subsequent (12% in fiscal 2023).Says Aditya Jhaver, Director, CRISIL Scores, “Typical pump makers are working at 65-70% of capability, and photo voltaic pump makers at 40%, obviating the necessity for any massive capex. This, together with wholesome money circulate and steady working capital cycle, pushed by well timed receivables and reasonable stock, will maintain
credit score profiles within the trade steady.”
Debt metrics will stay sturdy, with curiosity protection and gearing anticipated at 18-20 instances and fewer than 0.10 instances, respectively, this fiscal and the subsequent, barely higher than in fiscal 2023. That mentioned, rainfall and climate patterns, and geopolitical dangers affecting key uncooked materials costs will bear watching.
