Oswal Pumps IPO: Should You Subscribe? Here's What Brokerages Say

The initial public offering of Oswal Pumps Ltd. has opened for subscription on Friday, with non-institutional investors leading bids. The company, which has built its presence in the solar agricultural pumps segment, is now looking to scale both manufacturing capacity and market reach. Most brokerages have issued a 'subscribe' rating, citing a mix of robust financials, industry tailwinds, and strategic expansion.

"At a post-issue valuation that appears conservative when benchmarked against listed peers, we believe the IPO offers attractive entry for medium- to long-term investors seeking exposure to the confluence of agri-infrastructure and clean energy," said Gaurav Garg of Lemonn Markets Desk.

Here's what brokerages say about the maiden offer:

Deven Choksey Research highlights Oswal Pump's financial performance, with revenue and net profit growing at 58% and 157% CAGR respectively between fiscals 2022 and 2025. The company has supplied around 39% of the total solar pumps deployed under the government’s PM-KUSUM scheme in just four years, noted the brokerage.

Deven Choksey expects Oswal to benefit from strong execution, sectoral demand and scale, and gives a 'subscribe' call.

SBI Securities appreciates Oswal's strategy to deepen backward integration, automate manufacturing, expand solar capacities, launch new industrial pump products, and push exports. However, it flags significant risks:

• Heavy dependence on the PM-KUSUM scheme, with over 87% of the revenue of the nine months ended December tied to it.

• Revenue concentration in Haryana and Maharashtra, contributing over 79% of revenue in the aforementioned period.

• High customer concentration, with nearly 79% revenue from top 10 clients.

• Raw material cost sensitivity due to reliance on copper and solar cells.

Despite these, SBI Securities maintains a 'subscribe' view, backed by execution strength and long-term government focus on renewables.

Aditya Birla Capital sees Oswal's broad positioning across agriculture, residential, and industrial pumping needs as a strategic advantage. Its manufacturing capacity ramp-up places it well to capitalise on near-term demand, said the brokerage. The firm assigns a 'subscribe' rating with a long-term view. Risks from tender dependence and peer competition, however, remain relevant.

BP Capital calls Oswal the fastest-growing vertically integrated solar pump player in India, clocking a 45.1% revenue CAGR from fiscals 2022 to 2024. The domestic solar pump market is projected to grow from Rs 16,450 crore in fiscal 2025 to Rs 27,110 crore by fiscal 2030, and Oswal is well-placed to ride this trend, said the firm.

At a P/E of 21.2 times, BP Capital views the issue as attractively priced relative to peers, and issues a 'subscribe' recommendation.

Arihant Capital emphasises Oswal's solid foundation in the solar pump segment, strengthened by vertical integration and consistent growth. Its diversified portfolio and expanding reach help reduce concentration risk, said the brokerage. Arihant assigns a 'subscribe for long term' rating.