Buy Oswal Pumps Ltd for the Target Rs.450 by Choice Institutional Equities
Key Conference Call Highlights
Capacity Expansion & Capex (Total outlay: INR3.6 Bn):
* The company is ramping up its solar module capacity, from the current 600 MW to 2.1 GW in phases — 1 GW to be completed by Q1FY27 and the remaining 0.5 GW by Q3FY27
* Backward integration is under way with EVA encapsulant and aluminium extrusion lines being added by the end of FY27E
* Investments in the pumps and motors segment for automation and capacity enhancement are targeted for completion by Q3FY27E
Revenue & Growth Outlook:
* Management has guided for a soft H1FY27E, with revenue likely to be equal to H2FY26, owing to a gap before KUSUM 2.0
* Growth is expected to be back-ended, with a strong H2FY27E recovery led by KUSUM 2.0 scheme.
* Despite the weak first half, full-year FY27E revenue growth is guided at 20–25%. Peak revenue potential is pegged at INR 65 Bn
Profitability:
* FY27E PAT margin guidance stands at 15–17%, indicating a reasonable profitability retention despite near-term revenue headwinds
Cash Flow & Working Capital:
* Receivable days currently stand at 150–160 days
* Maharashtra (MSEDCL) was the major source of payment delays due to state elections and third-party funding issues but is now back on track and healthy payments are expected from Q4FY26
* PM Kusum 2.0 will bring further clarity on receivables, reducing to 30–40 days due to vendor-friendly modifications in the scheme
New Initiatives:
* The company is entering the solar inverter segment, starting with assembly operations, signalling the company’s intent to move up the value chain and diversify its product portfolio
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SEBI Registration no.: INZ 000160131
