Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  

| More

CRISIL Ratings: Agri pump makers to see 7-9% revenue growth next fiscal

Posted On: 2023-12-27 16:59:19 (Time Zone: IST)

Healthy profits, modest capex to support credit risk profiles

Agricultural (agri) pump makers will see healthy revenue growth of 7-9% in fiscal 2025, supported by resilient domestic demand for conventional pumps and a surge in offtake of solar pumps, largely under the PM Kusum Scheme1. This will follow a likely revenue growth of 8-10% in the current fiscal.

Operating margin, too, will remain healthy, at 12-13% this fiscal and the next, riding on improving operating leverage and with prices of key raw materials remaining steady. This, along with steady working capital cycle and moderate capital expenditure (capex), will support credit risk profiles.

An analysis of five large agri pump makers, comprising nearly 55% of the sector's revenue estimated at ~Rs 6,000 crore for fiscal 2024, indicates as much. The sector is dominated by conventional pumps (grid-connected and diesel pumps) which have ~90% share, with the remaining comprising solar pumps.

Demand for agri pumps is largely resilient - a 'good' monsoon drives up farm incomes and pump purchases, buoyed by healthy kharif crops, while a 'deficient' monsoon necessitates the usage of pumps to irrigate rabi crops. This was also visible in the current fiscal wherein revenue growth has been volume-driven, triggered by higher sales of conventional pumps amidst uneven monsoons caused by the El-Nino conditions.

Says Anuj Sethi, Senior Director, CRISIL Ratings, "Factoring normal monsoons in fiscal 2025, revenue growth for the industry will largely be volume driven. While conventional pumps may see stable growth at 6-8%, solar pump volumes will grow at a faster clip of ~20% on-year, supported by expected reduction in pump prices."

Solar pumps are expected to become cheaper in fiscal 2025, as manufacturers pass on lower prices of solar modules, a key raw material forming ~65-70% of solar pump cost2. This, combined with rising order flows under the PM KUSUM scheme which is set to close in March 2026; will drive the double-digit volume growth expectations for next fiscal.

Steady growth in volumes of conventional pumps coupled with price of its key raw materials - pig iron, steel and copper (forming ~70-75% of total cost) remaining rangebound will keep operating profitability healthy at 12-13% this fiscal and the next (~12% in fiscal 2023).

Says Aditya Jhaver, Director, CRISIL Ratings, "Conventional pump makers are operating at 65-70% of capacity, and solar pump makers at ~40%, obviating the need for any large capex. This, along with healthy cash flow and stable working capital cycle, driven by timely receivables and moderate inventory, will keep credit profiles in the industry stable."

Click here to send ur comments or to

Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only., its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.

Other Headlines:

Godrej Interio's 'HomeScapes' Study reveals Indians want ‘Me-Time’ at home

GDP growth to moderate to 6.0% in Q3 FY2024, led by agriculture and industry: ICRA

Indian stock exchanges rank first in the world in terms of the number of IPOs in 2023

CRISIL Ratings: After soaring this fiscal, airlines to land >20% operating profit growth next fiscal

Rising frauds propel demand for AI/ML strategies: Experian Study

Cement makers to add 150-160 MTPA capacity by fiscal 2028 - CRISIL

Investor exuberance propelling broking industry performance, MTF achieves a new high: ICRA

CRISIL Ratings: Securitisation volume up ~20% in first nine months of this fiscal

India is fastest growing large economy globally in CY2023-CY 2024 - Pantomath Report

CRISIL Ratings: Market share of gold-loan NBFCs steady despite bank competition

CRISIL Ratings: Vehicle loan AUM to vroom past Rs 8 lakh crore next fiscal

45% of Newbie traders claim that 'not knowing enough' is the primary reason for losses incurred in Futures & Options trading - Sharekhan's survey reveals

Indian mutual fund industry likely to sustain its strong inflows in 2024: ICRA Analytics

CRISIL Ratings: Operating profit of offshore rig operators to swell 30% next fiscal

CRISIL Ratings: Organised F&G retailer revenue to grow in mid-teens next fiscal

CRISIL Ratings: Shippers see a further revenue dip of 5-7% next fiscal as charter rates course correct

82% of professionals are concerned about job redundancy due to emerging technologies: Hero Vired Report

UPI transactions witnesses 118% rise at retail stores in 2023: PayNearby Report

Happy Forgings Limited - IPO - A trusted supplier for several Indian and Global OEMs - Reliance Securities

CRISIL Ratings: Penetration of electric buses set to double next fiscal

India's refined copper consumption to grow by 11% in FY2024, despite global headwinds: ICRA

CRISIL Market Intelligence and Analytics - Curb on cane juice for ethanol - Sugar output lift

Stable Repo Rates to Keep the Momentum Going for the Housing Market - Anuj Puri, Chairman - ANAROCK Group

Payback period for investment in sustainable warehouses come down to three years in India: A JLL - IndoSpace report

CRISIL Ratings - Profit margins of cotton yarn spinners to plunge 250-350 bps to decadal lows of 7-8% this fiscal

Government, PSUs, and Defence sector experience 14% upsurge in hiring: foundit Insights Tracker

CRISIL Ratings: Spirits high for organised liquor makers, revenues seen up 13%

Corporate bond market to more than double by fiscal 2030 - CRISIL

Gas Utilities : Gas consumption at record highs, growth now to trickle - Kotak Institutional Equities

Emkay and Geojit increase target prices of LIC, expect over 20% upside

CRISIL Ratings: Mall area to rise by 35% over the medium term on retail surge

Crop & Chemical Dashboard: Bottom is near, recovery unclear - Kotak Institutional Equities

Loan sell-downs of personal loan pools may see a temporary pause following the RBI's decision to increase risk weights: ICRA

India Surges Ahead in 5G Deployment, Paving the Way for a High-Tech Future!

CRISIL Ratings: Construction equipment revenue to grow 14-15% this fiscal

India to contribute 22% to the Global ER&D sourcing market by FY30: BCG-nasscom Report

CRISIL Ratings: In a decadal first, revenue of agrochemicals makers to slip ~3% on tepid demand this fiscal

CRISIL Ratings: Flexible packaging industry stares at decadal low profitability as oversupply stings

CRISIL Ratings: Domestic demand, softer cotton prices to sustain RMG growth

CRISIL Ratings: Higher workplace occupancy to light up cigarette volume 7-9%

CRISIL Ratings: Apparel retailers to grow 7-8% this fiscal via expansion, festival spur

CRISIL Ratings: For tea companies, ~8% revenue degrowth brewing this fiscal

CRISIL Ratings: Revenue of paper makers to crumple 8-10% this fiscal

ICRA expects banking sector to stay resilient, outlook remains Positive

CRISIL MI&A: Red-hot domestic demand to stave off steel price melt this fiscal

CRISIL Ratings: Replacement demand to drive tyre volume up 6-8% this fiscal

CRISIL Ratings: Home textiles makers to weave revenue, profitability rebound this fiscal

Capital outlay on roads, renewables seen rising ~35% in this and next fiscals to Rs ~13 lakh cr, backed by strong execution pace

Softening demand to moderate Indian IT services industry growth to 3-5% in FY2024: ICRA

CRISIL Ratings: Telcos may dial up Ebitda 15-17% to Rs 1.2 lakh crore this fiscal

Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2020