IPO Size: Rs.1,387 cr

• Fresh Issue of Rs. 890 cr for capex, of Rs. 362 cr and debt repayment of Rs. 311 cr (Rs. 340 cr net debt)
• Offer for Sale (OFS) of Rs. 497 cr, by the promoter (99.88% to drop 80% post IPO)

Price band: Rs. 584-614 per share

M cap: Rs. 6,998 cr, implying 20% dilution

IPO Date: Fri 13^th Jun to Tue 17^th Jun 2025, Listing Fri 20^th Jun 2025

Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.

Harayana-based Agricultural Pump Manufacturer

Oswal Pumps is an integrated manufacturer of solar-powered and grid-connected submersible and monoblock agricultural pumps, including electric motors (induction and submersible) and solar modules (GoI approved manufacturer). Haryana and Maharashtra account for 80% of Rs. 1,066 cr revenue in 9MFY25.

Beneficiary of Government’s PM-KUSUM Scheme

In FY24, company started participating directly in PM-KUSUM scheme, and enjoys 38% market share under the scheme, based on direct and indirect supply. This grew revenue from Rs. 385 cr in FY23 to Rs. 759 cr in FY25 and to Rs. 1,066 cr in 9MFY25.

Currently, 80% of revenue comes from Government supplies under the scheme. Hence, outstanding debtors have tripled to Rs. 711 cr, as of 31.12.24, from Rs. 240 cr, as of 31.3.24. But it is not concerning, and is similar to peer Shakti Pumps, which has 5 months of outstanding debtors, while Oswal has 6 months of outstanding debtors.

Fresh Issue for Capex

Oswal has manufacturing facility in Karnal, Haryana, with capacity utilisation of 75% for pumps and 60% for solar modules. It proposes Rs. 362 capex to increase capacity and backward integration, which is likely to be commissioned in phases by Dec 2025 and Jun 2026. Fresh issue proceeds will fund the expansion, aimed at growth, to capture opportunity of PM-KUSUM scheme.

PM-KUSUM targets installation of 1.40 million solar water pumps in off-grid areas, of which 1.2 million has been sanctioned and 0.8 million installed. The scheme also provides for subsidies for solarisation of 3.5 million grid-connected agricultural pumps for cost and environmental reasons, implying huge growth opportunity.

Strong Financials

Of the Rs. 1,066 cr revenue in 9MFY25, 50% was from sale of solar-agri pump and 30% from non-solar agri pumps. With 45% gross margin and 33% EBITDA margin, it reported a PAT of Rs. 217 cr in 9MFY25, leading to 20% net margin. Larger peer Shakti Pumps clocked Rs. 1,850 cr revenue in 9MFY25, with Rs. 300 cr PAT and 16% net margin.

On a small equity of Rs.10 cr (FV Re 1 each), Oswal’s EPS for 9MFY25 was at Rs. 22. It had a net worth is Rs. 398 cr, as of 31.12.25. Post IPO too, equity will remain low at Rs. 11.4 cr, with net worth of Rs. 1,300 cr. Net debt equity ratio of 0.8:1 will contract to 0.1:1, post IPO.

Attractive Pricing

Annualising 9MFY25 EPS of Rs. 22, PE multiple comes to 21x on historic basis. Peer Shakti Pumps is ruling at FY25 PE multiple of 29x. On Rs. 408 cr PAT in FY25, Shakti’s m cap is at Rs. 11,700 cr.

Against this, Oswal’s asking m cap of Rs. 7,000 cr is seen reasonable, based on FY25 estimated PAT of Rs. 290 cr.

On FY26E EPS of Rs. 30, IPO is priced at a PE multiple of 20x, for double digit net margin, growth investment and huge sector opportunity.