Oswal Pumps’ Rs 1,387.34 crore IPO Opens for Subscription – Should You Invest?

Oswal Pumps' Rs 1,387.34 crore IPO opens on June 13 with a mix of fresh issue and offer for sale. Backed by strong revenue growth but strained cash flows, the offering will test investor appetite amid rising receivables and working capital pressures. Should you subscribe? Here's a deep analysis

About the Issue:  

Oswal Pumps, a leading integrated solar pump manufacturer, is set to launch its Rs 1,387.34 crore initial public offering (IPO) on June 13, 2025, with the issue closing on June 17. The IPO consists of a fresh issue of equity shares worth Rs 890 crore and an offer for sale (OFS) of 0.81 crore shares amounting to Rs 497.34 crore by promoter Vivek Gupta, who currently holds a 25.17 per cent stake in the company. The anchor book will open on June 12. Allotment is expected to be finalized on June 18, while refunds and credit of shares will begin on June 19. The company is likely to list on the BSE and NSE on June 20.

Proceeds from the fresh issue will be utilized for various purposes, including Rs 280 crore towards debt repayment, Rs 273 crore investment in subsidiary Oswal Solar for setting up a new manufacturing facility in Haryana, Rs 89.86 crore for capital expenditure, and Rs 31 crore for debt repayment in Oswal Solar. IIFL Capital, Axis Capital, CLSA India, JM Financial, and Nuvama Wealth Management are the book-running lead managers for the IPO, while MUFG Intime India (Link Intime) is the registrar.

See the issue details below.

Objects of the Issue

The IPO proceeds aim to support expansion, improve financial health, and reduce debt burden.

• Capital Expenditure: Rs 89.86 crore will be used to enhance Oswal Pumps' operational infrastructure.
• Investment in Subsidiary: Rs 272.76 crore will be infused into Oswal Solar (subsidiary) via debt or equity to set up new manufacturing units in Karnal, Haryana.
• Debt Reduction (Parent Company): Rs 280 crore will be allocated to prepay or repay outstanding borrowings of Oswal Pumps.
• Debt Reduction (Subsidiary): Rs 31 crore will be used to prepay or repay borrowings of Oswal Solar.

Promoter

The promoters of Oswal Pumps include Vivek Gupta, Amulya Gupta, Shivam Gupta, Ess Aar Corporate Services Private Limited, Shorya Trading Company Private Limited, and Singh Engcon Private Limited. Collectively, these promoters hold 99.88 per cent of the company’s pre-issue equity share capital.

Company Profile

Incorporated in 2003, Oswal Pumps Limited is a leading manufacturer and distributor of pumps and related equipment for domestic, agricultural, and industrial use. Its product portfolio includes solar pumps, submersible and monoblock pumps, electric motors, winding wires, cables, and control panels, all marketed under the ‘Oswal’ brand. The company operates a 41,076 sq. m. manufacturing facility in Karnal, Haryana, and has built strong in-house capabilities in product design, engineering, and testing over two decades.

As of December 31, 2024, Oswal had executed 38,132 turnkey solar pumping system orders under the PM-KUSUM Scheme across states like Haryana, Rajasthan, Uttar Pradesh, and Maharashtra. Its distributor base has grown from 473 in FY22 to 636 in FY24, and the company exports to 17 countries across the Asia-Pacific, Middle East, and North Africa. Oswal Pumps employed 164 people as of March 31, 2024.

Global & Indian Pump Market Outlook

The global pump market, valued at Rs 6,10,000 crore in CY24, is projected to reach Rs 7,90,000 crore by CY29, growing at a 5.6 per cent CAGR, driven by rising investments in renewable energy, infrastructure, smart manufacturing, and water treatment. The Asia-Pacific region dominates with a 55 per cent share, expected to rise to 56 per cent by CY29. Among pump types, solar pumps lead with a 19.5 per cent CAGR, while centrifugal and submersible pumps grow steadily at 7.5 per cent.

India’s pump market, worth Rs 38,050 crore in FY25, is set to reach Rs 59,190 crore by FY30, growing at a 9.2 per cent CAGR. Agriculture accounts for 67 per cent of the market, but faster growth is seen in industrial (10.5 per cent) and residential (13.6 per cent) segments, backed by initiatives like Jal Jeevan Mission and PM-KUSUM. Key pump categories driving growth include submersible (Rs 33,040 crore, 10.5 per cent CAGR), centrifugal (Rs 11,410 crore, 6.4 per cent), monoblock (Rs 7,420 crore, 8.1 per cent), multistage (Rs 29,070 crore, 16.6 per cent), and solar pumps (Rs 27,110 crore, 11 per cent).

With over 80 lakh diesel pumps in use, India’s solar pump replacement potential stands at Rs 1,20,000 crore. PM-KUSUM targets 14 lakh solar pump installations, yet only 7.7 lakh have been deployed as of March 2025, indicating untapped demand. Oswal Pumps is a key supplier under this scheme. The pump industry also benefits from the growing solar rooftop and electric motor sectors, supported by the PLI scheme to boost local manufacturing.

Financials

In the FY24, the company reported a revenue of Rs 758.57 crore, up from Rs 385.04 crore in the previous year. Net profit rose to Rs 97.67 crore from Rs 34.20 crore. For the 9MFY25, the company reported a revenue of Rs 1,065.67 crore and a net profit of Rs 216.71 crore. As of April 2025, total outstanding borrowings on a standalone basis stood at Rs 308.57 crore.

(Source – Company’s RHP)

(Source – Company’s RHP)

(Source – Company’s RHP)

While Oswal Pumps has demonstrated strong revenue growth (CAGR of 28.16 per cent from FY22 to 9MFY25), its operating cash flow dynamics raise significant concerns. Despite growing top-line figures, the company’s cash flow from operations turned negative (-Rs 197.45 crore) in the first nine months of FY25, compared to positive flows in FY22–24. This signals a worrying disconnect between reported earnings and actual cash generation.

The core issue lies in the sharp increase in receivables, which surged from Rs 37.50 crore in FY22 to Rs 711.17 crore by 9MFY25 — reflecting a staggering CAGR of 85.64 per cent, far outpacing sales growth of 26.16 per cent. This suggests a material portion of sales may not be collected promptly, straining liquidity and indicating aggressive revenue recognition or elongated credit terms to customers, especially in government-linked contracts.

Inventory has also risen steadily (from Rs 75.46 crore in FY22 to Rs 167.09 crore in 9MFY25), though not as sharply as receivables. Combined, these have inflated the cash conversion cycle (CCC) from 71 days in FY22 to a steep 142 days in 9M FY25, doubling in less than three years. This reflects a deepening working capital lock-up, impacting the company’s ability to self-finance operations.

In essence, Oswal is growing, but not sustainably. The rise in receivables and inventory is inflating the balance sheet and stressing cash flows. Unless the company improves collections and inventory turnover, it risks becoming dependent on external financing to fund operations and capex. For investors, this cashflow-sales divergence is a red flag that warrants close monitoring, especially in light of Oswal’s already elevated leverage levels.

Capacity Utilisation

Between FY22 and 9MFY24, Oswal Pumps reported fluctuating capacity utilization across key segments. In Stainless Steel Pumps, utilization declined from 63.3 per cent in FY22 to 57.1 per cent in FY24 but rose to 75 per cent in 9MFY25 due to reduced capacity. Cast Iron Pumps saw capacity fall in FY23, and despite slight recovery in FY24, utilization dropped to 46.8 per cent in 9MFY25. Stainless Steel Motors maintained stable capacity with sub-50 per cent utilization until 9MFY25, when it surged to 77.6 per cent due to capacity reduction. Cast Iron Motors saw utilization fall from 88 per cent in FY22 to 69.2 per cent in FY23, improve to 81.4 per cent in FY24, but drop again to 40.5 per cent in 9MFY25 on lower production. In Solar Modules, 9MFY25 utilization stood at 56.4 per cent, with 134.25 MW produced out of 237.91 MW available. Overall, Oswal’s utilization trends reflected shifting capacities, production changes, and operational realignment across product categories.

Revenue Contribution

Oswal Pumps' revenue mix has shifted significantly from FY2022 to 9MFY2025. Institutional customers, who contributed 58.74 per cent (Rs 200.07 crore) in FY2022 and peaked at 75.61 per cent (Rs 270.90 crore) in FY2023, dropped sharply to just 7.15 per cent (Rs 70.46 crore) in 9MFY2025. In contrast, revenue from government entities surged from nil in FY2022–FY2023 to Rs 333.86 crore (45.65 per cent) in FY2024 and Rs 773.29 crore (78.51 per cent) in 9MFY2025, becoming the primary growth driver. Sales through distributors and exports remained relatively stable, while total revenue grew from Rs 340.61 crore in FY2022 to Rs 984.99 crore in 9M FY2025.

Peer Comparison

Oswal Pumps competes with domestic and global manufacturers like Kirloskar, Shakti Pumps, C.R.I. Pumps, WPIL, KSB, and Roto Pumps in a market driven by technology, pricing, design, quality, and engineering capabilities. The company stands out in profitability, posting an impressive EBITDA margin of 30.12 per cent and PAT margin of 20.3 per cent in FY24—well above Kirloskar (14.52 per cent, 8.62 per cent) and Shakti Pumps (23.72 per cent, 16 per cent), reflecting strong cost controls and operating leverage.

However, Oswal lags in capital efficiency. Its Net Debt to Equity ratio rose to 1.83 in FY24, the highest among peers—most of whom maintain net cash positions. Its Net Debt to EBITDA stands at 2.08, indicating elevated leverage and potential strain on future cash flows.

Oswal’s operational efficiency has declined, with its Cash Conversion Cycle (CCC) deteriorating to 142 days in 9MFY24 from 71 days in FY21—now significantly worse than peers like Kirloskar (65 days in FY23), Shakti Pumps (114 days), and WPIL (139 days).

While Oswal boasts the highest RoNW at 88.73 per cent, its EPS (Rs 9.82) and NAV/share (Rs 16.10) remain modest versus larger peers.

(Source – Company’s RHP)

 (Source – Company’s RHP)

Analysis of Strength and Weakness

Strengths & Opportunities

• Market leadership in solar pumps: Oswal holds a 38 per cent share in solar pump installations under the PM Kusum Scheme, with strong revenue CAGR of 45.07 per cent between FY22–FY24.
• Integrated manufacturing: It manufactures pumps, motors, and solar modules in-house, with backward integration across panel boards, frames, and control panels—enhancing cost efficiency and quality control.
• Capacity expansion plans: The company plans to increase solar module capacity from 570 MW to 2,070 MW by FY27 to meet internal demand and grow third-party sales.
• Growing distribution and export footprint: Dealer outlets nearly doubled from 473 in FY22 to 925 in 9MFY24; exports now reach 22 countries, highlighting rising brand acceptance.
• Large market opportunity: An expected solar pump market of Rs 27,110 crore and a Rs 15,000 crore replacement market by FY30 offer strong long-term tailwinds.

Weaknesses and Threats

• Heavy revenue dependence on PM Kusum Scheme: Over 78.5 per cent of 9MFY25 revenue is tied to the scheme; policy uncertainty post-December 2026 poses a major risk.
• Payment delays and rising receivables: Government dependence has led to stretched receivables—76 per cent of current asset in 9MFY25, up from 26.4 per cent in FY22.
• Concentration risks: Revenue is geographically skewed and over 78 per cent comes from the top 10 customers, raising exposure to regional or client-specific disruptions.
• Limited solar manufacturing track record: Losses in Oswal Solar and Oswal Green indicate execution risk in scaling this vertical.
• Competitive intensity: Faces strong competition from established players like Kirloskar and Shakti Pumps, potentially pressuring margins.

Valuation and Outlook

Oswal Pumps operates in a promising segment, especially as India’s solar-powered water pump market is expected to grow at an annual rate of 11 per cent till FY30. With over 60 of Indian agriculture dependent on groundwater for irrigation, the sector enjoys strong structural tailwinds. Oswal’s integrated manufacturing capability—with backward integration in solar modules (570 MW capacity) and plans to add another 1,500 MW—offers it operational efficiency and better cost control. Its ability to cater to both internal EPC demand and third-party customers supports long-term scalability.

However, significant risks cloud this growth narrative. The company’s revenue is highly concentrated, with 78.5 per cent of operating revenue in 9MFY25 derived from the government’s PM-KUSUM scheme, exposing it to policy and payment risks. This reliance is evident in its ballooning receivables, which accounted for 76 per cent of current assets in 9MFY25, up from 26.4 per cent in FY22—resulting in negative operating cash flows during the period.

From a valuation standpoint, the company appears expensive. At the upper end of the IPO price band, Oswal seeks a market cap of Rs 6,998 crore, translating to a P/E of 71.7x, P/B of 5.5x, and EV/EBITDA of 45.5x. These multiples are significantly higher than those of peers like Shakti Pumps (19x EV/EBITDA), WPIL (11.9x), and Kirloskar Brothers (21.3x) as on June 13, 2025, all of which also maintain lower debt-to-equity ratios. While the IPO proceeds will make Oswal debt-free, its high working capital intensity remains a concern. The company’s cash conversion cycle has deteriorated from 91 days in FY24 to 142 days in 9MFY25, which annualises to approximately 189 days — highlighting a sharp decline in working capital efficiency and increasing its reliance on external capital.

Although Oswal’s long-term growth story is compelling, the current high valuation, over-reliance on government schemes, negative cash flow trends, and a weak market environment make the IPO unattractive at this stage. That said, the company’s post-IPO debt-free status and expansion plans could enhance income and scalability over time.

Recommendation: Avoid the Oswal Pumps IPO for now. High-risk investors may track the stock for long-term opportunities once valuations become more reasonable and expansion plans are effectively executed.