Oswal Pumps IPO Day 2: Issue booked 1.61 times; HNI, retail portions lead

Oswal Pumps IPO: The initial public offering (IPO) of Oswal Pumps Ltd, a manufacturer of solar pumps, opened on June 13 and has been fully subscribed on second day of the bidding process. The overall subscription of the public issue stood at 1.61 times of the total shares reserved for investors as of Monday, June 16.

Oswal Pumps IPO Day 2 Subscription Status

On Monday, the IPO received bids for a total of 2,61,59,928 shares against 1,62,12,980 shares, according to BSE data.

Among the investor categories, non-institutional investors (NIIs) showed the highest interest, subscribing for 1,57,64,280 shares against the 35,00,959 shares reserved for them. On the other hand, qualified institutional buyers (QIBs) showed the least interest, subscribing for only 27 percent—or 12,21,024 shares—of the 45,43,116 shares allocated to the category.

Meanwhile, retail investors submitted bids for 91,74,624 shares, or 1.12 times, against the 81,68,905 shares reserved for this segment.

Oswal Pumps IPO | Should you subscribe or avoid?

Zee Business Managing Editor Anil Singhvi has advised investors to 'avoid' the issue and be cautious about the Oswal Pumps IPO because of sudden rise in the company’s financials in FY24

Singhvi highlights several key things about the company as follows:

• Experienced management with over 20 years in the pump manufacturing industry
• Active in domestic growing solar pump and renewable energy space
• A turnkey solution provider under the government’s PM-KUSUM scheme
• Has an order book of Rs 1,100 crore and a bid pipeline of Rs 3,200 crore
• Revenue and profit increased sharply only in FY24, despite the company’s long history
• Negative cash flow from operations in FY25 at Rs 197 crore
• Short-term borrowings rose significantly from Rs 73 crore in FY22 to Rs 334 crore in FY25
• High trade receivables, suggesting pressure on working capital
• Business is heavily dependent on government orders and policies

Domestic brokerages view on the IPO

In contrast, domestic brokerages have recommend to subscribing the issue with long-term horizon.

SBI Securities has suggested subscribing to the public issues for a long-term investment. The brokerage highlighted that the company was among the leading suppliers of solar pumps under the PM-KUSUM scheme during FY23 and FY24 and is one of the few players in India offering fully integrated. According to the brokerage, at the upper price band of Rs 614 per share, the IPO is valued at a price-to-earnings (P/E) multiple of 24.2x and an EV/EBITDA multiple of 15.1x based on annualised 9MFY25 earnings and post-issue capital.

However, SBI Securities' analysts have also pointed out the same risk—Oswal Pumps’ heavy reliance on government projects and policies, along with potential delays in cash flow, could impact the business.

According to another brokerage Anand Rathi, the company is well-positioned to benefit from strong industry tailwinds, thanks to its vertically integrated manufacturing capabilities and solid presence in key agricultural states like Haryana. The brokerage believes the IPO is fairly priced and has also suggests to subscribing with long term perspective.

Bajaj Broking recommends subscribing to the Oswal Pumps IPO with a long-term investment perspective. 

"The significant surge in profitability from FY24 onwards is attributed to its strategic shift towards solar pumps," according to the Bajaj Broking analysts. "Post-IPO, Oswal Pumps is expected to be debt-free, and its planned expansion is expected to further increase its income," they said.

Analysts at Bajaj Broking noted that the IPO is aggressively priced, considering the company’s recent financial performance, adding that the solar pump segment is becoming increasingly competitive with more corporates entering the market. Despite this, the brokerage suggests that well-informed investors may consider investing for the medium to long term.

Anchor investors

The company has raised Rs 416 crore from institutional investors like Societe Generale, BNP Paribas, Quant Mutual Fund, Kotak MF, ICICI Prudential, Amundi Funds, and others.

Oswal Pumps IPO | Price band, issue size, other key details

The company has fixed the price band between Rs 584 and Rs 614 per share with a lot size of 24 shares and in multiples thereafter. The total issue size of the IPO is Rs 1,387.34 crore.

Oswal Pumps IPO | Allotment & listing dates

The issue will close on June 17, with allotment expected on June 18, and a tentative listing date of June 20 on both the BSE and NSE.

The proceeds from the IPO will be used for various purposes as follows:

• Rs 273 crore is allocated to Oswal Solar, a subsidiary, for setting up a new facility
• Rs 280 crore will go towards repaying existing debt
• Rs 89.8 crore is earmarked for capital expenditure
• Remaining funds will be used for general corporate purposes

Oswal Pumps IPO | BRLMs and registrar details

The book running lead managers of the IPO are IIFL Capital Services, Axis Capital, CLSA India, JM Financial, and Nuvama Wealth Management, while MUFG Intime India (Link Intime India) is the official registrar to the issue.

About Oswal Pumps do?

Oswal Pumps is a solar pump manufacturer with a wide range of products, including solar-powered and grid-connected submersible and monoblock pumps, electric motors, and under the ‘Oswal’ brand. It is also a key supplier under the Government of India’s PM Kusum Scheme, accounting for approximately 38 per cent of all solar-powered agricultural pumps installed in the country as of December 2024.

The company is also among the few in India capable of delivering fully integrated turnkey solar pumping systems, including manufacturing and installation services.

(Disclaimer: The views/suggestions/recommendations expressed here in this article are solely by investment experts. Zee Business suggests its readers consult their investment advisers before making any financial decision.)