Agri pump makers to see 7-9% revenue growth next fiscal, says CRISIL
PM Kusum Scheme1, said CRISIL in a media note.
«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,» it said.
An analysis of five large agri pump makers done by CRISIL 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.
Anuj Sethi, Senior Director, CRISIL Ratings said, “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 cost.
