Oswal Pumps Ltd. IPO: Key Details

Oswal Pumps

• Oswal Pumps is coming out with a 100% book building; initial public offering (IPO) of 2,33,39,726 shares of Rs 1 each in a price band Rs 584-614 per equity share.
• Not more than 50% of the issue will be allocated to Qualified Institutional Buyers (QIBs), including 5% to the mutual funds. Further, not less than 15% of the issue will be available for the non-institutional bidders and the remaining 35% for the retail investors.
• The issue will open for subscription on June 13, 2025 and will close on June 17, 2025.
• The shares will be listed on BSE as well as NSE.
• The face value of the share is Rs 1 and is priced 584 times of its face value on the lower side and 614 times on the higher side.
• Book running lead managers to the issue are IIFL Capital Services, Axis Capital, CLSA India, JM Financial and Nuvama Wealth Management.
• Compliance Officer for the issue is Anish Kumar.

Profile of the company

Oswal Pumps is the fastest growing vertically integrated solar pump manufacturers in India in terms of revenue growth during the last three fiscals, with its revenues growing at a CAGR of 45.07% between Fiscal 2022 and Fiscal 2024. It manufactures solar-powered and grid-connected submersible and monoblock pumps, electric motors comprising induction and submersible motors as well as solar modules, which it sells under the ‘Oswal’ brand. It has over 22 years of experience in pumps encompassing engineering, product design, manufacturing and testing. It caters to the diverse requirements of end-users in the agricultural sector for irrigating fields; the residential sector for maintaining gardens and fountains, extracting water, supplying water to overhead tanks and cleaning households and small establishments; commercial premises such as shopping malls, offices and hotels; industries which use its pumps in boilers and water treatment, water transportation and sewage applications and use its electric motors in machinery applications and cooling tower systems.

The company is one of the few fully integrated Turnkey Solar Pumping Systems providers in India with the capability to manufacture solar powered agricultural pumps, solar modules and pump controllers and provide installation services for such systems. To enhance its capabilities as Turnkey Solar Pumping Systems provider, it commenced manufacturing solar modules for Turnkey Solar Pumping Systems on January 8, 2024 through its wholly-owned subsidiary, Oswal Solar Structure Private Limited. It also benefits from its Associate, Walso Solar Solution Private Limited, which manufactures mounting structures, BOS and essential components for Turnkey Solar Pumping Systems.

It has end-to-end pump manufacturing capabilities and has undertaken several backward integration initiatives over the years, enabling it to produce several components of a pump in-house and providing it with competitive advantages. It also focuses on recycling scraps to produce certain components of pumps. For example, it utilizes scrap metal to manufacture components such as suction, non-return valve, impellers, bowls sleeves, collets and stator end ring. This approach allows it to minimize waste and helps it to improve its margins. It also harnesses the capabilities of electronics to optimise the end-use efficiency of its pumps.

Proceed is being used for:

• Funding certain capital expenditure of the company
• Investment in its wholly-owned Subsidiary, Oswal Solar, in the form of equity, for funding the setting up of new manufacturing units at Karnal, Haryana
• Pre-payment/ re-payment, in part or full, of certain outstanding borrowings availed by the Company
• Investment in its wholly-owned Subsidiary, Oswal Solar, in the form of equity, for repayment/prepayment, in part or full, of certain outstanding borrowings availed by Oswal Solar
• General corporate purposes 

Industry Overview

Pumps are vital across various sectors in India, including agriculture, industrials and infrastructure, making the pump industry a key contributor to the nation's growth. The Indian pumps market was Rs 380.50 billion in FY25, expected to reach Rs 591.90 billion by FY30, growing at a CAGR of 9.2% between FY25-30. India currently has just 5% share in global pumps market, indicating a significant opportunity for growth Agriculture drives growth in the Indian pumps market through increasing demand for efficient irrigation solutions, boosted by government initiatives, increasing adoption of solar pumps and rising need for reliable water supply to enhance crop yields. Rapid industrialization, coupled with significant infrastructure development, drives the need for pumps for water supply, wastewater treatment, and manufacturing operations. Urbanization in India is also driving the growth of pumps due to increased demand for water management, construction, and industrial activities in expanding urban areas.

Electric motors are devices that transform electrical energy into mechanical energy, usually resulting in rotational movement. These motors are used in consumer electronics, automotive industry, industrial applications, agriculture, pumps, etc. The global electric motor market is projected to grow at a CAGR of 7% from CY24-29, with the market being valued at $219.40 billion by CY29. The electric motor market in India was estimated at $4.10 billion in FY25 and is expected to reach $8.00 billion in FY30, growing at a CAGR of 14.3% from FY25-30. Induction motors, also known as asynchronous motors, are a type of alternating current electric motor that operates based on the principle of electromagnetic induction, Induction motors are extensively utilized in numerous applications with pumps being of it. The induction motor market in India was estimated at $0.80 billion in FY25 and is expected to grow at a CAGR of 13.80% from FY25-30, with the market being valued at $1.50 billion in FY30.

Further, High-end precision pumps are vital to key sectors of the Indian economy, including oil and gas refining, nuclear power plants, and pharmaceuticals. These industries demand pumps that offer exceptional accuracy, reliability, and resistance to harsh materials and conditions, ensuring optimal performance and safety. They handle a wide range of viscosities and temperatures, making them ideal for applications requiring precise flow control and reliability, such as in oil and gas, pharmaceuticals, and food processing industries. The high-end precision industrial pumps market grew at a CAGR of 8.7% between FY19-25 and was valued at Rs 31.6B in FY25, forming 2% of the global high-end precision industrial pumps market and is expected to reach Rs 57.50 billion by FY30, growing at a CAGR of 12.7% from FY25-30.

Pros and strengths

One of the largest suppliers of solar powered agricultural pumps under the PM Kusum Scheme: The company is fastest growing vertically integrated solar pump manufacturers in India in terms of revenue growth during the last three fiscals, with its revenues growing at a CAGR of 45.07% between Fiscal 2022 and Fiscal 2024. Initially, it started supplying solar powered agricultural pumps to Turnkey Solar Pumping System providers participating in the PM Kusum Scheme, including Tata Power Solar Systems Limited and certain vendors empanelled under the Mukhyamantri Saur Krushi Pump Yojana launched by the Government of Maharashtra in 2019. Subsequently, in 2021, it started offering Turnkey Solar Pumping Systems under the PM Kusum Scheme either directly or through third party bidders. Within four years of supplying solar powered agricultural pumps, in Fiscal 2024 and 2023, it emerged as one of the largest suppliers of solar powered agricultural pumps under the PM Kusum Scheme.

Vertically integrated manufacturing competencies: The company’s operations are vertically integrated, encompassing the manufacturing of components for its pumps and the production of solar modules for solar-powered pumps. Its capabilities are further strengthened by its associate, Walso Solar Solution Private Limited, specializing in the manufacturing of mounting structures, BOS and essential components for Turnkey Solar Pumping Systems. This approach provides it several advantages including the ability to design and develop new products, optimize its operational costs and improve its margins.

End-to-end pump manufacturing capabilities: The company has end-to-end pump manufacturing capabilities, encompassing manufacturing components of monoblock and submersible pumps using processes such as cast-iron casting, investment casting, aluminium die casting, electrical grade stamping, submersible cable and wire winding, injection plastic moulding, rubber moulding, thrust bearing, stainless steel stator casing, stamping, machining and assembly and packaging. Over the years, it has undertaken extensive backward integration initiatives, enabling it to produce several critical components of a pump and motors and undertake various processes in-house which provides it with competitive advantages.

Comprehensive product portfolio in multiple product specifications: The company offers a wide range of solar-powered and grid-connected submersible and monoblock pumps, electric motors as well as solar modules under its ‘Oswal’ brand. Its focus on providing quality pumps and building its brand through marketing and brand building initiatives, along with its more than 22 years of operating history, has contributed to a positive brand recall among its target audience which is instrumental in establishing a loyal customer base. Its comprehensive product portfolio allows it to address the diverse requirements of its end-users in the agricultural, residential and industrial sectors. The company’s product portfolio helps it to attract new customers, expand its market reach, solidify its industry position, and mitigate business risks by reducing dependence on any single product or end-use market.

Risks and concerns

Maximum revenue comes from limited customers: The company’s business largely depends upon its top 10 customers, which contributed 78.87%, 79.50%, 72.56% and 66.29% of its revenue from operations for the nine months ended December 31, 2024, Fiscals 2024, 2023 and 2022, respectively. The loss of all or a substantial portion of sales to any of its top 10 customers for any reason (including, due to loss or termination of contracts, failure to negotiate commercially acceptable terms, disputes with these customers), could have an adverse impact on its business, results of operations, financial condition and cash flows.

Dependent on a few suppliers for the supply of raw materials: The company’s primary raw materials for manufacturing pumps are copper, stainless steel, pig iron and polypropylene; motors are casting and electrical grade sheets; and solar modules are ethylene-vinyl acetate sheets, back sheets, glass, solar cells, junction box and aluminium frames. It typically procures these materials through purchase orders and do not enter into any long-term agreements with its suppliers. Consequently, its suppliers may not perform their obligations in a timely manner, or at all, resulting in delays to its production schedule and adversely affecting its output.

Geographical constrain: The company and its Subsidiary, Oswal Solar operate two manufacturing facilities which are located at Karnal in the state of Haryana. One of its manufacturing facilities is engaged in the manufacturing of monoblock pumps, submersible pumps and electric motors, whereas the other manufacturing facility is engaged in the manufacturing of solar modules. Due to the geographic concentration of its manufacturing facilities in Karnal, Haryana, its operations are susceptible to local and regional factors, such as civil unrest as well as other adverse social, economic and political events in Haryana, weather conditions, natural disasters, regional conflicts and other unforeseen events and circumstances.

Huge working capital requirement: The company requires working capital to finance the purchase of raw materials required for its operations, as well as for its other expenses before payment is received from customers. The actual amount and timing of its future working capital requirements may differ from estimates as a result of several factors including unforeseen events beyond its control, delays or cost overruns, unanticipated expenses, regulatory changes, adverse economic conditions, engineering design changes, technological changes and additional market developments and new opportunities in the markets in which it operates. Its inability to obtain adequate amounts of working capital in a timely manner and on terms that are acceptable to it, may adversely affect its business, results of operations, financial condition and cash flows.

Outlook

Oswal Pumps is a manufacturer and distributor of pumps. The company offers a diverse range of products catering to domestic, agricultural, and industrial applications, including solar pumps, submersible pumps, monoblock pumps, pressure pumps, sewage pumps, electric motors, submersible winding wires & cables, and electric panels. The company has a growing network of distributors across India, increasing from 473 distributors as of March 31, 2022, to 636 distributors as of March 31, 2024. On the concern side, the company’s business largely depends upon its top 10 customers, which contributed 78.87%, 79.50%, 72.56% and 66.29% of its revenue from operations for the nine months ended December 31, 2024, Fiscals 2024, 2023 and 2022, respectively. The loss of any of these customers could have an adverse effect on its business, results of operations, financial condition and cash flows. The company’s operations are supported by two manufacturing facilities which are situated at Karnal, Haryana. The geographical concentration of its manufacturing facilities exposes its operations to potential risks arising from local and regional factors such as adverse social and political events, weather conditions and natural disasters in this region.

The issue has been offering 2,33,39,726 shares in a price band of Rs 584-614 per equity share. The aggregate size of the offer is around Rs 1363.04 crore to Rs 1433.06 crore based on lower and upper price band respectively. Minimum application is to be made for 24 shares and in multiples thereon, thereafter. On performance front, the company’s revenue from operations increased by 97.01% from Rs 3,850.36 million in Fiscal 2023 to Rs 7,585.71 million in Fiscal 2024. The company’s restated profit for the year was Rs 341.99 million in Fiscal 2023 compared to Rs 976.65 million in Fiscal 2024 and PAT margin was 12.83% in Fiscal 2024 compared to 8.83% in Fiscal 2023. 

The company intends to continue to focus on increasing integration in its operations to optimise its margins by (i) integrating certain processes and manufacture certain components for pumps in-house; (ii) automate specific pump manufacturing processes; and (iii) strengthen its technological capabilities and enhance automation and IT interface of its products through strategic acquisitions. The company intends to leverage its pump and solar module manufacturing capabilities to capitalise on the growth opportunities provided by the PM Kusum Scheme and also tap into the growing market of farmers seeking to adopt solar technology for irrigation to reduce costs and enhance productivity. Also, it intends to expand its operations into states such as Maharashtra, Karnataka and Madhya Pradesh to leverage the opportunities provided by the PM Kusum Scheme and establish itself as a key player in the solar pump industry.