Business Profile of the Oswal Pumps Limited
Oswal Pumps, with over 21 years of experience in manufacturing pumps is the fastest growing vertically integrated solar pump manufacturer in India. They manufacture solar-powered and grid-connected submersible and monoblock pumps, electric motors, and solar modules under the 'Oswal' brand.
They cater to various end-users in the agricultural sector, residential, commercial, and industrial sectors. The company expanded its operations to manufacture solar-powered agricultural pumps in 2019, and by August 2024, it had supplied 26,270 Turnkey Solar Pumping Systems directly under the PM Kusum Scheme for several states.
The company operates a manufacturing facility in Karnal, Haryana. It also operates a subsidiary for manufacturing solar modules for Turnkey Solar Pumping Systems. The company has a strong engineering and design team, an extensive distributor network, and exports to 17 countries. The company's growth is attributed to its promoters and senior management.
Oswal Pumps Limited IPO Objective
As per the draft red hearing prospects, the IPO issue consists only of offer for sale.
- The OFS consists of up to 11,312,000 equity shares aggregating up to Rs. XXXX million. Nothing from those proceeds of OFS will be allotted to company.
- Oswal Pumps IPO offer only has fresh issue of Rs. 1, 000 crores. The company aims to utilize around Rs. 89 crores in capex plan for the company, Rs. 419 crores as investment in subsidiary, Rs. 235 crores in payment of certain debts of the company, Rs. 26 crores as investment in subsidiary for payment of certain loan obligations and rest of the amount in corporate general expenses.
| Particulars | Total estimated amount |
| Funding Capex plan of Company | 893.69 |
| Investment in Oswal Solar (Subsidiary) for setting up
of new manufacturing units at Karnal, Haryana |
4191.63 |
| Payment of certain outstanding borrowings availed by Company | 2350 |
| Investment in Oswal Solar (Subsidiary) for repayment of
certain outstanding borrowings availed by Oswal Solar |
260 |
| General corporate purposes | XXXX |
| Total | XXXX |
(in ₹ million)
IPO Details of Oswal Pumps Limited:
| IPO Open Date | N.A. |
| IPO Close Date | N.A. |
| Basis of Allotment | N.A. |
| Listing Date | N.A. |
| Face Value | ₹10 per share |
| Price | N.A. |
| Lot Size | N.A. |
| Total Issue Size | XXXX Equity Shares |
| aggregating up to XXXX million | |
| Fresh Issue | XXXX Equity Shares |
| Aggregating up to ₹10,000.00 million | |
| Offer For Sale | Up to 11,312,000 equity shares |
| Aggregating up to XXXX million | |
| Issue Type | Book Built Issue IPO |
| Listing At | BSE & NSE |
| QIB Shares Offered | Not more than 50% of the Net Issue |
| Retail Shares Offered | Not less than 35% of the Net Issue |
| NII (HNI) Shares Offered | Not less than 15% of the Net Issue |
Issue Price & Size: Oswal Pumps Limited IPO
The issue price of Oswal Pumps Limited hasn’t been released yet. Upon releasing the dates, the investors can bid between those price ranges. The company has both fresh issue of Rs. 1000 crores as well as offer for sale of up to 11,312,000 equity shares.
Launch Date of Oswal Pumps Limited IPO
The IPO opening date of Oswal Pumps hasn’t been officially announced yet, upon the declaration of dates investor can bid for IPO.
Oswal Pumps Limited Financial Statements
| Particulars | FY24 | FY23 | FY22 |
| INCOME | |||
| Revenue from operations | 7585.71 | 3850.36 | 3603.84 |
| Other income | 26.63 | 24.36 | 7.24 |
| Total income | 7612.34 | 3974.72 | 3611.08 |
| EXPENSES | |||
| Cost of materials consumed | 5118.31 | 2478.29 | 2601.96 |
| Purchase of stock-in-trade | 138.42 | 128.74 | 89.35 |
| Changes in inventories of finished good,
work-in-progress and stock-in- trade |
-227.07 | 61.39 | -148.99 |
| Employee benefits expense | 424.02 | 293.49 | 294.53 |
| Finance costs | 143.13 | 59.01 | 83.69 |
| Depreciation and amortization | 85.97 | 77.53 | 69.33 |
| Other expenses | 630.79 | 310.26 | 382.09 |
| Total expenses | 6313.57 | 3408.71 | 3371.62 |
| Restated Profit before tax | 1298.77 | 466.01 | 239.46 |
| Restated Profit for the year | 976.65 | 341.99 | 169.29 |
| KPI | Oswal | Kirloskar | Shakti | WPIL | KSB | Roto |
| Revenue from Operations (₹ million) | 7585.71 | 40011.99 | 13707.39 | 16644.04 | 22472.38 | 2744.96 |
| Gross Profit (₹ million) | 2556.05 | 20181.62 | 4510.81 | 13169.39 | 9697.28 | 1786.49 |
| Gross Margin (%) | 33.70% | 50.44% | 32.91% | 79.12% | 43.15% | 65.08% |
| Operating EBITDA (₹ million) | 1501.24 | 5363.65 | 2248.32 | 3035.96 | 3029.8 | 655.5 |
| Operating EBITDA Margin | 19.79% | 13.41% | 16.40% | 18.24% | 13.48% | 23.88% |
| Restated Profit for the Year (₹ million) | 976.65 | 3496.8 | 1417.09 | 1930.15 | 2087.33 | 394.15 |
| PAT Margin (%) | 12.83% | 8.61% | 10.31% | 11.40% | 9.10% | 14.13% |
| Return on Net Worth (%) | 88.73% | 22.30% | 24.15% | 18.78% | 17.07% | 21.95% |
| Return on Capital Employed (%) | 81.85% | 29.58% | 31.72% | 25.91% | 22.82% | 27.21% |
| Net Debt to Equity Ratio (in times) | 0.42 | -0.06 | -0.14 | -0.18 | -0.09 | 0.06 |
| Net Debt to Operating EBITDA Ratio (in times) | 0.5 | -0.21 | -0.48 | -0.76 | -0.39 | 0.17 |
| Cash Conversion Cycle (Days) | 91 | 65 | 114 | 139 | 118 | 117 |
| Gross Block (₹ million) | 1148.28 | 14490.47 | 3203.27 | 4365.97 | 8597.81 | 1571.72 |
| Addition to Property, Plant and Equipment (₹ million) | 284.7 | 1588.84 | 210.98 | 412.14 | 972.26 | 463.32 |
| Fixed Asset Turnover Ratio (in times | 8.33 | 6.26 | 8.16 | 3.58 | 5.44 | 2.34 |
| Total Borrowings (₹ million) | 754.22 | 1549.11 | 829.11 | 2065.17 | 0 | 357.81 |
Oswal Pumps Limited Promoters & Shareholding
As of date, there are six promoters of the company, including corporate and individual.
The promoter in aggregate collectively holds 97.83% of the paid-up share capital of company, on a fully diluted basis.
| Name of the Shareholder | Pre-Offer No of equity shares | Pre-Offer | PROMOTER SELLING SHAREHOLDER |
| Promoters | |||
| Shorya Trading Company Private Limited | 54521550 | 54.81 | |
| Vivek Gupta | 25211000 | 25.34 | 11,312,000 |
| Ess Aar Corporate Services Private Limited | 17590750 | 17.68 | |
| Total | 97323300 | 97.83 | |
| Other members of the Promoter Group | |||
| Radhika Gupta | 1700000 | 1.71 | |
| Padam Sain Gupta | 425000 | 0.42 | |
| Padam Sain Gupta HUF | 17000 | 0.02 | |
| Prem Lata | 17000 | 0.02 | |
| Total | 2159000 | 2.17 | |
| Grand Total | 99482300 | 100 | |
Should You Subscribe to Oswal Pumps Limited IPO or Not
While investing or subscribing to any IPO, consider the investment rationales related to the company. Hence, here you can find out the strength of the company that will be its growth factors. And also check the risk factors that can affect the growth and operational efficiency of the company.
Competitive Strengths of Oswal Pumps Limited:
One of largest suppliers of solar powered agricultural pumps
The company has expanded to manufacturing products lien from manufacturing low-speed monoblock pumps to grid-connected high-speed monoblock pumps, grid-connected submersible pumps, electric motors, and solar-powered agricultural pumps.
Prior to 2021, the company supplied solar-powered agricultural pumps to parties participating in the PM Kusum Scheme. Later in 2021, the company began offering Turnkey Solar Pumping Systems under the PM Kusum Scheme directly or through third-party bidders. In Fiscal 2024 and 2023, the company emerged as one of the largest suppliers of solar-powered agricultural pumps under the scheme. As of filing the DRHP, the company has supplied more than total of 26,000 systems.
| State Government | No. of Solar Pumping Systems Supplied |
| Government of Haryana | 14075 |
| Government of Rajasthan | 1425 |
| Government of Uttar Pradesh | 1227 |
| Government of Maharashtra | 9543 |
| Total | 26270 |
Companies’ vertically integrated solar pump manufacturer in India has experienced a CAGR of 45.07% in revenue growth between Fiscal 2022 and Fiscal 2024. The Indian solar pump market is valued at Rs. 5100 crores in FY24, and is expected to grow at a CAGR of 33.3% from FY24 and FY29.
With government focus on eco-friendly practices of cultivation, these pumps contribute to sustainable agricultural practices and increase productivity. The PM Kusum Scheme targets the installation of 1.40 million standalone solar water pumps in off-grid areas, providing energy security for farmers and promoting renewable energy use in the agricultural sector.
Vertically integrated manufacturing competencies
The company is vertically integrated, manufacturing components for pumps and solar modules for solar-powered pumps. Its associate company, Walso Solar Solutions Private Limited, specializes in manufacturing mounting structures, BOS, and essential components for Turnkey Solar Pumping Systems.
This approach allows the company to design and develop new products, optimize operational costs, and improve margins.
The company has end-to-end pump manufacturing capabilities, including monoblock and submersible pumps. The company has invested significantly in advanced machinery and equipment to support their manufacturing operations. The company manufactures its products in its manufacturing facilities in Karnal, Haryana.
The company's subsidiary, Oswal Solar Structure Private Limited, began manufacturing solar modules on January 8, 2024, which has helped enhance backward integration capabilities, revenues, and profitability.
Strong engineering and design capabilities
As of March 31, 2024, the company employs team of 15 engineering and designers, focusing on product design and cost-saving innovations. They have upgraded submersible pumps' locking mechanisms, reduced non-return valve thickness, and invested in advanced simulation software for computational fluid dynamics and seismic analysis. They are equipped with technical software’s for detailed drawings and analysis.
Comprehensive product portfolio
OSWAL Pumps offers a diverse range of solar-powered pumps, electric motors, and solar modules. The company caters to all type of clients form household, industries and agricultural, with primary focus toward agricultural customers. They are always on track to attract new customers and expanding its market reach. Among its category of pumps, as can be seen from data mentioned in table below, they cater almost half of their revenue by supplying turnkey Submersible Solar Pumping Systems.
| Particulars | FY24 | FY23 | FY22 |
| Percentage of Revenue from Operations | |||
| Turnkey Solar Pumping Systems (Submersible Pumps) | 49.49% | 18.03% | 3.91% |
| Turnkey Solar Pumping Systems (Monoblock Pumps) | 11.56% | 9.49% | NIL |
| Solar Submersible Pumps | 11.16% | 32.17% | 49.74% |
| Solar Monoblock Pumps | 2.89% | 7.57% | 4.99% |
| Non-Solar Submersible Pumps | 5.49% | 12.35% | 23.89% |
| Non-Solar Monoblock Pumps | 0.59% | 1.31% | 2.08% |
| Electric Motors | 5.08% | 8.59% | 9.68% |
| Total | 86.24% | 89.51% | 94.29% |
| Particulars | FY24 | FY23 | FY22 |
| Percentage of Revenue from Operations | |||
| Agriculture | 96.06% | 90.84% | 87.03% |
| Residential | 2.15% | 5.13% | 7.02% |
| Industrial | 1.79% | 4.03% | 5.95% |
Diversified customer base
The company has taken help of its 636 distributors for selling and expanded its presence in India. The company has strong presence in states like Haryana, Maharashtra, UP, Rajasthan and Punjab. There strong distributorship and geographical outreach helps them to reduces risk associated with geographic concentration.
The company introduced the 'Oswal Shoppe' concept in March 2024 to strengthen its market presence. They employ in-house sales and marketing team, which collaborates with distributors for the sale of their products. As of FY24, the company has 54 Oswal Shoppe, 21 in Haryana, 20 in Punjab, 8 in UP, and 5 in Rajasthan.
The company has served over 35 institutional customers in FY24. As of this fiscal year the company had dedicated sales and marketing team of 53 employees, responsible for addressing customer queries and resolving operational issues related to its products.
| Customer | FY24 | FY23 | FY22 |
| Percentage of Revenue from Operations | |||
| Institutional customers | 43.37% | 75.61% | 58.74% |
| Government entities | 45.65% | NIL | NIL |
| Sales through Distributors | 5.37% | 11.07% | 23.99% |
| Exports | 4.80% | 11.64% | 10.84% |
| Others | 0.81% | 1.68% | 6.41% |
Future plans
- The company plans to use Rs. 89 crores in plant and machinery to optimize its operations and improve margins.
- The company plans to produce variable frequency drives (VFDs) and single-phase controller components.
- Automate specific pump manufacturing processes for reducing labor costs, increasing efficiency, enhancing quality, etc.
- Tap into the growing market of farmers seeking solar technology for irrigation through PM Kusum Scheme
- The company wishes to expand its visibility in states like Maharashtra, Karnataka, and Madhya Pradesh.
- The company plans to integrate aluminium extrusion frames into its operations, allowing for in-house manufacturing of frames for solar modules. The company plans to use IPO proceeds to set up aluminium extrusion unit at its manufacturing facility in Karnal, Haryana.
- Giving push to green evergy, the company plans to increase solar module manufacturing capacity by 3,000 MW.
- The company wishes to add range of industrial pumps and electric motors to meet the diverse customer needs.
- The company also plans to capitalize on the growing demand for pumps and electric motors from international markets, including Australia, United States and Europe.
Risk Factors of Oswal Pumps Limited:
Revenue concentration from supply of Turnkey Solar Pumping Systems
The PM Kusum Scheme, launched by the Indian government in March 2019, provides ₹344 billion (USD 4.1 billion) in central financial support for installing 1.40 million standalone solar agriculture pumps in off-grid areas. The scheme aims to provide energy security for farmers, reduce diesel consumption, promote renewable energy use in agriculture, and reduce environmental pollution.
Contracts for Turnkey Solar Pumping Systems, including solar powered agricultural pumps, solar modules, mounting structures, pump controllers, and their installations, are offered by state and central government institutions through competitive bidding processes.
The company has previously supplied both Turnkey Solar Pumping Systems and solar powered agricultural pumps to players participating in the scheme. Reduction in funding by government or inability to continue winning bids may adversely impact their business, and impact overall financials.
| Particulars | FY24 | FY23 | FY22 |
| Rev from supply of Turnkey Solar Pumping Systems directly by Co under the PM Kusum Scheme | 44.77% | Nil | Nil |
| Rev from supply of Turnkey Solar Pumping Systems to players participating in the PM Kusum Scheme | 15.39% | 27.52% | 3.91% |
| Rev from supply of solar pumps, solar modules, structures and BOS kits to players participating in PM Kusum Scheme | 25.56 | 42.22% | 51.41% |
Business dependent on performance of agri sector
The company is exposed to fluctuations in the agricultural sector's performance, which may differ in India compared to other countries. There are various factors affecting agriculture sector like government policies, product mix shifts, credit availability and economic conditions.
The company sells pumps for the agricultural sector, catering to various needs such as reliable irrigation water supply, rising food demand, improved efficiency, technological advancements, and environmental awareness. Demand for company products can decline because of factors mentioned above.
| Sector | FY24 | FY23 | FY22 |
| Agricultural | 96.06% | 90.84% | 87.03% |
Geography concentration
As can be seen from data mentioned I table below, the company generates a significant portion of its revenues from selling products in Haryana, Maharashtra, UP, and Rajasthan. The Haryana state alone contributes to almost half of the revenue to the company.
The sales of company products may hempen due to any natural calamity, economic condition, government policies, changing weather conditions, etc.
| Geography | FY24 | FY23 | FY22 |
| Haryana | 72.28% | 44.00% | 49.60% |
| Maharashtra | 7.85% | 18.69% | 9.86% |
| Uttar Pradesh | 6.12% | 3.76% | 2.73% |
| Rajasthan | 4.53% | 7.29% | 17.85% |
| Total | 90.78% | 73.74% | 80.04% |
Client concentration
Company’s revenue is concentrated on client’s basis. As can be seen from data in table below, top client represent healthy portion of revenue to the company amounting to nearly one third of company revenue. Top five clients contribute to nearly two-third of total revenue.
Any loss of client or slower in demand for product by these customers could negatively impact the company's business, results of operations, financial condition, and cash flows.
| Particulars | FY24 | FY23 | FY22 |
| Percentage of Revenue from Operations | |||
| Top One | 35.04% | 32.01% | 44.10% |
| Top Five | 68.05% | 63.90% | 59.03% |
| Top 10 | 79.50% | 72.56% | 66.29% |
Manufacturing facilities
Currently, the company runs two manufacturing facilities in Karnal, Haryana, which can be led to operational disruptions due to various circumstances which are out of company horizon like civil unrest, weather conditions, natural disasters, and regional conflicts.
The company has already extended its installed capacity by 400 MW and is further planning to increase it by 3,000 MW by FY27 to meet the growing demand for Turnkey Solar Pumping Systems in both domestic and cross-border market. The company through fresh issue has made allocation for establishment of new manufacturing facility to the tune of around Rs. 419 crores.
The company cannot guarantee that this increase in capacity will result in a corresponding increase in revenues. Factors beyond the company's control, such as general economic conditions, state and central government policies, or customer demand, may affect business fundamentals, and overall financial performance of the company.
Distribution network
The company has been expanding its network and currently distributes its product through 636 distributors as of March 2024. These distributors not only act as a mediator between consumer and company but also help in spreading presence in region. However, disputes with distributors could negatively impact the company's image, its operations and financials.
Supplier of raw material
The company sources various raw material for manufacturing o it product like copper, stainless steel, pig iron, and polypropylene.
The company's reliance on a select group of suppliers may also limit its ability to negotiate arrangements, potentially affecting profit margins and operational results. Over-reliance on specific supplier for raw material could cause production delays and adversely affecting output.
| Particulars | FY24 | FY23 | FY22 |
| Percentage of Materials Consumed | |||
| Top One | 7.86% | 15.71% | 13.94% |
| Top Five | 27.38% | 38.92% | 31.30% |
| Top 10 | 43.39% | 56.00% | 43.10% |
Cost of raw material impacting margins
The company manufactures pumps and electric motors, as well as solar modules. The manufacturing of product requires raw material which includes copper and solar cells. Data accounting to the cost of supplied has been presented in the table below. Movement in cost of copper and other raw material is out company control area. So the company may experience volatility in the cost of these materials, which could negatively impact its business. Any price increases could strain the company's working capital, as it would require additional funds to procure these materials at higher prices.
| FY24 | FY23 | FY22 | |
| Cost of copper sourced from suppliers (₹ million) | 359.79 | 416.93 | 551.45 |
| Percentage of cost of materials consumed | 7.03% | 16.82% | 21.20% |
| Percentage of revenue from operations | 4.92% | 11.64% | 16.19% |
| Cost of solar cells sourced from suppliers (₹ million) | 220.49 | Nil | Nil |
| Percentage of cost of materials consumed | 4.31% | NA | NA |
| Percentage of revenue from operations | 3.02% | NA | NA |
Introducing new products
The company plans to introduce new product categories of pumps and electric motors to meet customer preferences and demands. However, the company's lack of familiarity with these products and limited customer insights may make it difficult to anticipate customer needs. This could lead to higher customer return rates and lower profitability in new product categories.
Exporting product
From April 1, 2021 and March 31, 2024, the company exported its products to 17 countries. Their revenue contribution from export outside India in previous three years was, 4.80%, 11.64%, and 10.86%. The top three countries in terms of revenue in Fiscal 2024 were Iraq, UAE, and Libya. However, due to economic slowdown, varying duties, and alteration in FTA with countries may affect its business.
Oswal Pumps Limited Grey Market premium
Grey market premium is the premium quoted over the IPO issue price. GMP shows that investors are ready to pay above the upper band of the IPO issue price. GMP is determined in the grey market as per the demand and supply of the shares in the primary market. A grey market is that unofficial ecosystem of unlisted companies' stocks that start trading even before the launch of the IPO to the date of its listing.
Also Read: What is Grey Market Premium in IPO: How is GMP Calculated & Reliable
However, GMP is not a reliable factor, as it keeps fluctuating as per the demand and supply of shares in the primary market. There are numerous factors that affect the stock market in India and individual stock prices of different companies that are already listed and trading in the secondary market. However, for an IPO-bounded company, you can consider the GMP as the speculative listing price of the share
According to various online sources, the Grey Market Premium or GMP of the Oswal Pumps Limited is trading around Rs XX in the grey market. It means shares are trading at the upper band issue price of Rs XX with a premium in the grey market and may list around the same price.
