Oswal Pumps IPO - Should You Subscribe? Read Anand Rathi's Analysis

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Anand Rathi Report

Oswal Pumps Ltd. launched its initial public offering today and the offer closes for subscription on June 17. The supplier of solar powered agricultural pumps has fixed the price band in the range of Rs 584 to Rs 614 per share.

The Rs 1387.34 crore IPO comprises of fresh issue of Rs 890 crore and offer-for-sale of Rs 497.34 crore. Investors can place bids starting from a minimum of 24 shares and in multiples thereafter.

Objects of the Issue

• Funding certain capital expenditure of the Company.

• Investment in wholly owned subsidiary for setting up Manufacturing units at karnal, Haryana.

• Repayment of borrowings.

• Investment in wholly owned subsidiary for repayment of borrowings

• General corporate purposes.

Valuation

Oswal Pumps is One of the largest supplier of solar powered agricultural pumps under the PM Kusum Scheme, well positioned to capitalise on strong industry tailwinds with Vertically integrated manufacturing competencies and Strong presence in major agricultural states in India including Haryana and growing presence in other states along with Extensive distribution network catering to a diversified customer base At the upper price band company is valuing at P/E of 24.2x, EV/Ebitda of 22.8x and market cap of Rs 6998 crore post issue of equity shares.

We believe that the IPO is fairly priced and recommend a “Subscribe-Long term” rating to the IPO.

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