IPO Note : Oswal Pumps Ltd by ARETE Securities Ltd
Oswal Pumps Ltd. (OPL) is a vertically integrated solar pump manufacturer, offering a comprehensive suite of products including pumps, electric motors, and solar modules under the 'Oswal' brand. The company's key strategic advantage lies in its turnkey capabilities, providing end-to-end solutions from manufacturing to installation. This has made it a leader in the agricultural sector, particularly through the PM KUSUM Scheme, where it has supplied nearly 38% of all pumps installed as of December 2024.
Key Investment Strengths :
• Market Leadership in Government Schemes: Company has rapidly become one of the largest suppliers for the PM KUSUM scheme, having delivered over 45,545 solar pumping systems to state governments and major partners like Tata Power Solar. This demonstrates proven execution capability at a large scale.
• End-to-End Manufacturing Control: The company's vertical integration-from pump components to solar modules-provides significant competitive advantages, including optimized costs, enhanced quality control, and the ability to rapidly innovate and customize products, leading to better margins.
• Deep & Growing Market Reach: Companies distribution network is a core asset, having expanded to 925 distributors by December 2024. This is further strengthened by the recent launch of 248 'Oswal Shopee' retail outlets, enhancing brand visibility and direct market presence.
• Significant Capacity & Expansion Roadmap: Operating from one of India's largest single-site pump manufacturing facilities, OPL has ambitious growth plans. It aims to increase its pump production capacity from 2 lakh to 5 lakh units and its solar module capacity from 570 MW to 2,200 MW by 2028, ensuring it can meet anticipated future demand.
Valuation and View:
At a P/E of 24.2x, the valuation appears reasonable given the company's explosive growth (140% PAT CAGR FY22-24) and dominant position in the solar pump market. Strong future revenue is visible, with a 1,100 crore order book and a massive 3,200 crore bid pipeline. While the heavy reliance on government schemes and potential cash flow delays are key risks to monitor, the company's market leadership and clear growth runway present a compelling long-term investment case. We recommend investors SUBSCRIBE to the issue with a long-term investment horizon.
Please refer disclaimer at http://www.aretesecurities.com/
SEBI Regn. No.: INM000012740
