Oswal Pumps IPO analysis

Oswal Pumps IPO (initial public offering) will open for subscription on June 13, 2025, and close on June 17, 2025. Below is a breakdown of the solar-powered water pump provider’s strengths, weaknesses and growth prospects to help investors make an informed decision.

Oswal Pumps IPO in a nutshell

• Quality: During FY22-24, the company reported an average return on equity (ROE) and return on capital employed (ROCE) of around 76 and 51 per cent, respectively.
• Growth: Between FY22 and FY24, its revenue and profit after tax grew by around 45 and 140 per cent per annum, respectively.
• Valuation: At the upper price band of Rs 614, the stock is expected to be valued at a P/E ratio of around 72 times based on FY24 earnings and a P/B ratio of 5.5 times based on nine-month earnings for FY25. In comparison, its peers are trading at a median P/E of 35 times and an average P/B of nearly 8 times.
• Overview: Oswal Pumps stands to gain from India's rising demand for energy-efficient solar-powered water pumping solutions, supported by strong rural electrification, increased groundwater-based irrigation and government-backed schemes like PM-KUSUM.

Its integrated manufacturing capabilities and backward integration into solar modules position it well to capture this growing opportunity. However, the company remains exposed to risks from its concentrated product mix in submersible pumps, government tenders, and the cyclical nature of agri-infrastructure demand.

About Oswal Pumps

Oswal Pumps is a leading Indian manufacturer of submersible and solar pumps and also offers motors, panel boards and solar components. As of December 31, 2024, the company operated four manufacturing units in Haryana and maintained a distribution network of over 925 dealers and distributors across 22 states, with exports to 18 countries.

Its products cater to agriculture, residential, industrial, and government clients, with a significant presence in government-led solar pump installations under schemes like PM-KUSUM.

Strengths of Oswal Pumps

• Integrated manufacturing: The company is among the few that provides products across its value chain including engineering, procurement, and construction (EPC) services. It has an installed 570 MW solar module capacity, making it backward integrated. It plans to add 1500 MW of additional capacity for solar modules and products such as panel boards, frames, and control panels. This will help improve cost efficiency, quality control and will allow the company to meet both internal requirements and third-party demand.

Weaknesses of Oswal Pumps

• Revenue concentration: For nine months of FY25, around 78.5 per cent of Oswal’s operating revenue came from products and services linked to the PM-KUSUM scheme. This high concentration exposes the company to policy and execution risks.

 The heavy government reliance also means delay in payments, which is evident from the company’s rising receivables that made up 76 per cent of current assets for nine months of FY25, sharply up from 26.4 per cent in FY22.

Risk report

Company and business

• Will the company be able to scale up its business?

Yes. The Indian solar-powered water pump market is projected to grow 11 per cent annually until FY30. Given that agriculture remains a core part of the economy and that 60 per cent of irrigation depends on groundwater, the sector offers significant growth potential that will help the company scale up.

• Does the company have recognisable brands with client stickiness?

No. The company does not have a recognisable brand and most of its products are sold based on tenders from the government.

• Does the company have a credible moat?

No. The company operates in an industry crowded with many organised players providing similar products.

Financials

• Was the company's operating cash flow positive during the last three years?

Yes. The company's operating cash flow has been positive during FY22-24. However, its rising receivables are straining cash conversion. As of nine months of FY25, the company has reported negative cash flow from operations.

• Is the company free from reliance on huge working capital for day-to-day affairs?

No. The company has high working capital requirements, as evident from its steep working capital cycle of 91 days in FY24, which has risen to 142 days for nine months of FY25.

• Can the company run its business without relying on external funding in the next three years?

No. If the company doesn’t improve its working capital cycle, it will have to rely on external capital to meet its funding requirements.

Assessing an IPO requires a careful evaluation of a company's strengths, weaknesses, and growth potential, just like we've outlined for Oswal Pumps. But wealth creation can only be achieved through a well-researched, balanced stock portfolio.

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Disclaimer: This story is not a stock recommendation. Investors should do their due diligence before investing.

Also watch: Why you should not invest in IPOs