Oswal Pumps, a Haryana-based head in solar-powered and grid-connected pumps, has pointed for an Initial Public Offering (IPO) desired at a growing ₹1,000 crore.
This forthcoming mainboard IPO seeks support from the Securities and Exchange Board of India (SEBI) through a Draft Red Herring Prospectus (DRHP) pointed out on September 17, 2024.
The funds increased will support considerable capital expenditure, deficit repayment, and the establishment of new manufacturing structures in Karnal, Haryana.
Structure of the IPO
The IPO will have two main components:
- Fresh Equity Issue: ₹1,000 crore worth of new shares will be issued.
- Offer-for-Sale (OFS): Promoter Vivek Gupta will offer 1.13 crore equity shares for sale, letting partial withdrawals while drawing new investors.
The IPO is being handled by renowned financial institutions, including Axis Capital, CLSA India, IIFL Securities, JM Financial, and Nuvama Wealth Management.
Financial Overview and Market Competitiveness
Oswal Pumps has shown remarkable growth, with revenues almost doubling from ₹758.6 crore in FY23 to ₹758.6 crore in FY24. Profits overflowed by an amazing 186%, reaching ₹97.7 crore, thanks to operational efficiencies and market growth.
Also, the company’s EBITDA margins have increased by 480 basis points to 19.8%, emphasising strong profitability.
Material costs have also spiked, reflecting the company’s fast scaling. For FY24, the cost of materials consumed reached ₹5,118.31 million, an 81.07% share of total expenses, reaching 72.70% in FY23.
This means an increased need for solar-powered and grid-connected pumps, placing Oswal Pumps as a frontrunner in the green energy revolution.
Employee Attrition and Operational Expansion
A favourable development for Oswal Pumps is decreased employee decay rates. As of March 31, 2024, the attrition rate had enhanced to 33.2%, down from 46.67% in FY23 and 62.95% in FY22.
The workforce strength stands at 1,851 employees, offering stability and workforce retention as the company expands operations.
Profits from the IPO will be used to finance the company’s capital expenditure plans, including new manufacturing units in Haryana and investment in technology to enhance production capabilities.
Also, the company plans to refund a part of its existing debt, maintaining its financial situation.
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Market Position and Peers
Working in a competitive industry, Oswal Pumps has proved itself against strong players like Kirloskar Brothers, Shakti Pumps, WPIL, KSB, and Roto Pumps.
However, its focus on solar-powered solutions has provided it a unique market benefit, mainly with its involvement in the PM Kusum Scheme, where the company has had around 26,270 turnkey solar pumping systems across many Indian states.
Despite intense competition, Oswal’s creative product line, strong brand credit, and operational efficiencies have allowed it to grab considerable market share, placing it for further growth post-IPO.
Growth Potential and Future Prospects
With a thriving solar market in India and increased emphasis on sustainable energy solutions, Oswal Pumps is set to capitalize on the country’s renewable energy goals.
The company’s growth plans, associated with strong financial performance, make it a lucrative investment chance for both retail and institutional investors. Profits from the IPO will be important in improving its production capabilities and entering new market features.
Oswal’s installed customer base, government contracts, and technological advancements in pump manufacturing give it a stable foundation to make upon post-IPO. As the demand for solar-powered pumps increases in the agricultural and industrial sectors, Oswal is well-positioned to profit from these trends.
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Disclaimer
This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research or consult with financial experts before making any investment decisions regarding the Oswal Pumps IPO.
