Key Points
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 Scheme, according to CRISIL Ratings..
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 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...
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 cost...
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)...
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Agri pump makers to see 7-9% revenue growth next fiscal, says CRISIL
27, Dec, 23The 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.