Shares of Shakti Pumps (India) (SPIL) hit a 52-week low of Rs 202, down 2 per cent on Monday, having declined 5 per cent in the past two trading days, on the BSE after Care Ratings downgraded the long-term rating of the bank facilities of the company with a negative outlook. The stock has fallen below its previous low of Rs 203 touched on November 18, 2019.
“The long-term rating outlook of SPIL has been revised from ‘Stable’ to ‘Negative’ on expectation that SPIL’s scale of operations and profitability are likely to be lower than that envisaged earlier on account of delay in implementation of centrally sponsored schemes for installation of solar pumps for agricultural uses,” Care Ratings said in a press release.
This, along with sustained debt levels, is also expected to translate into weaker than anticipated debt coverage indicators. The outlook could be revised back to ‘Stable’ if there is a sustainable increase in SPIL’s scale of operations and better-than-expected profitability, or there is meaningful reduction in its debt levels aided by better collections or reduced inventory holding, it added.
In the past three months, the stock of SPIL tanked 36 per cent due to weak September quarter (Q2FY20) earnings, as compared to a 9 per cent rise in the S&P BSE Sensex.
SPIL had reported a consolidated net loss of Rs 1.7 crore in Q2FY20, as against a net profit of Rs 9.27 crore in a year ago quarter. Operational revenue declined 34 per cent to Rs 91 crore from Rs 138 crore in the corresponding quarter of previous fiscal.
The rating agency said the ratings are tempered by decline in SPIL’s scale of operations and moderation in its profitability during H1FY20 on account of the increased competitive intensity in the solar pumps market and lower demand from its customers due to delay in implementation of centrally sponsored schemes resulting in moderation in its debt coverage indicators.