Shakti Pumps Cites DCR Cells Shortage, Prices For ‘Moderate’ Growth

Issues linked to Domestic Content Requirements (DCR) mandates in solar projects appear to be reaching a head for solar developers in India. The mandate, which enforces use of only DCR cells and modules for almost all solar projects in India with exemptions only for select categories, has been causing a lot of heartburn in the market, with many developers complaining about the high prices as well as shortage of DCR modules.

The issues are two fold. A shortage of DCR panels, and linked to that, the much higher price of these panels, with premiums going as high as 100% over non-DCR modules.

Highlighting this most recently was the Chairman of India’s largest solar pump manufacturer, Dinesh Patidar, who cited the shortage of DCR panels as a limiting factor in faster growth for his business. Shakti Pumps has been an outstanding performer in the market over the past year, delivering a string set of numbers for Q3 FY25 as well. Patidar was speaking at an analyst call post Shakti Pumps strong Q3 results.

With one of the highest capacities for installing pumps, Patidar said that while they remain confident of 20-25% growth in the present market situation, but the limiting factor was not their own capacity but the availability of DCR panels. “We are fully capable of  bidding for, and winning more orders, but that doesn’t make sense without adequate availability of panels”. With sellers limited to a few firms like Adani Solar and Premier Energies, Patidar built his hopes for faster growth once cell capacities built by Waaree Energies, Tata Power etc hit the market soon.

Patidar also stressed that margins are also being affected by the much higher premium of DCR panels, stressing that future margin improvements are dependent on the movement of the USD relative to the INR and the price of DCR modules in the domestic market. He cited some rise in costs for modules linked to the anti-dumping duties as a smaller, but contributing factor for margins pressure.

The Shakti Pumps stock , which has been on a tear until recently, corrected almost 10% after the call, indicating just how important the issue is for investors, and how it is beginning to hurt firms at the wrong end of the shortage. Interestingly, DCR cell and module manufacturers like Premier Energies and Waaree Energies that are also listed have done better, even though apprehensions over the sustainability of their margins has limited upside in recent weeks.

Cell capacity in India is set to ramp up significantly, with the mandate to start ALCM (approved list of cell manufacturers) by June 2026. That has seen a rush of module manufacturers rush to manufacture cells as well, but the process will take longer for most as cell making is a vastly more complicated process than the assembly work required in module making.  That is one reason why large developers like ReNew have also projected for a shortage during the transition period. See ReNew Foresees A Dip In Solar Cell Capacity With ALCM.