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Shakti Pumps, KSB Pumps up over 5% after GST rate cut

Shakti Pumps, Kirloskar Brothers, KSB Pumps and Roto Pumps have rallied by up to 12% on BSE in intra-day trade

SI Reporter  |  Mumbai 

Shakti Pumps, KSB Pumps surge over 5% after cut in GST rate

Shares of manufacturers such as Shakti (India), Kirloskar Brothers, and have rallied by up to 12% on BSE in intra-day trade after the Goods and Service Tax (GST) on pump parts has been reduced from 28% to 18%.

Among the individual stocks, (India) has rallied 12% to Rs 544 on BSE on back of heavy volumes. The trading volumes on the counter jumped more than five-fold with a combined 983,529 shares changed hands on the BSE and NSE till 10:51 am.

Shakti claims a market share of around 70%-80% in the solar industry. The solar business can be divided into two segments such as solar integrated segment and solar OEM (Original Equipment Manufacturer) business. The solar integrated business is EPC (Engineering, Procurement and Construction) business of solar pumps; and solar OEM business is supplying just the to its channel partners registered with MNRE (Ministry of New and Renewable Energy).

Last month, the rating agency CARE Ratings revised the ratings of Shakti on expectation of sustained demand for under solar application in medium term, given the strong impetus of government on improving farm yield, incremental usage of renewables in agriculture sector and support extended through subsidies.

“The ratings, however, continue to be constrained by SPIL’s working capital intensive operations, susceptibility to volatility in raw material prices & forex rates and intense competition in the manufacturing industry. SPIL’s ability to improve its capacity utilization along with growth in income from both, domestic as well as export and efficient management of its working capital while maintaining its comfortable leverage would be the key rating sensitivities,” CARE Ratings said in a release.

“The company says that 115000 solar tenders are already out in the market and estimates solar market to be around Rs 50 Bn; of which the company expects majority of business to come from OEMs. The company also expects large orders from African countries. Africa is under International Solar Alliance (ISA) project by FY19E. Management estimates the market potential to be between Rs.250bn to Rs.300bn and expects to capture close to 20% of the market going forward,” Analysts at Karvy Stock Broking said in August company update report.

KIRL. BROTHERS 252.80 233.45 8.29
SHAKTI PUMPS 524.50 487.30 7.63
KSB PUMPS 764.40 719.55 6.23
ROTO PUMPS 110.60 105.30 5.03

First Published: Mon, October 09 2017. 11:13 IST