Upcoming IPO: Oswal Pumps Files Draft Papers With SEBI For Rs 1,000 Crore Public Issue; Check Details

Oswal Pumps, a Haryana-based manufacturer specializing in solar-powered and grid-connected pumps, has taken a step toward going public. The company filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) on September 17, 2024, as it seeks approval to raise funds through a mainboard initial public offering (IPO). This IPO is expected to include a fresh equity issue worth Rs 1,000 crore, coupled with an offer-for-sale (OFS) of 1.13 crore equity shares by the company's promoter, Vivek Gupta.

Oswal Pumps' IPO is structured to raise funds through both fresh equity and the OFS, allowing its promoter to offload a portion of his holdings. The fresh issue will help the company finance several key initiatives, including capital expenditures for new manufacturing facilities in Karnal, Haryana. A portion of the proceeds will also be earmarked for debt repayment, boosting the company's balance sheet, while the remaining funds will be used for general corporate purposes.

In FY24, Oswal Pumps has showcased strong financial growth with a revenue of Rs 758.6 crore, marking a 97% year-on-year increase. This near-doubling of revenue was driven by the company's expanding operations and robust demand for its products, particularly in the solar and electric pump segments. Profits surged by 186% to Rs 97.7 crore in FY24. The company's earnings before interest, taxes, depreciation, and amortization (EBITDA) also saw significant growth, increasing by 160% to Rs 150.1 crore. EBITDA margins improved by 480 basis points, rising to 19.8%.

A key factor contributing to Oswal Pumps' financial success has been its ability to manage material costs. The company's draft prospectus highlighted that the cost of materials consumed in FY24 rose to Rs 511.83 crore, up from Rs 247.82 crore in FY23. This increase was indicative of the company's rapid growth, with material costs accounting for 81.07% of total expenses in FY24, compared to 72.70% in the previous year.

One of the notable highlights in Oswal Pumps' draft prospectus is the improvement in its employee attrition rate. As of March 31, 2024, the company had 1,851 employees, with an attrition rate of 33.2%. This marked a significant improvement from the 46.67% attrition rate reported in FY23 and the 62.95% rate seen in FY22. This declining attrition rate indicates the company's efforts to foster a stable workforce.

Oswal Pumps has carved out a niche for itself in the manufacturing of submersible and monoblock pumps, as well as electric motors, all sold under its flagship Oswal brand. One of its key growth areas has been the production of solar-powered pumps, a market segment that has witnessed increasing demand due to government initiatives promoting renewable energy. Under the PM Kusum Scheme, Oswal Pumps has successfully executed orders for 26,270 turnkey solar pumping systems across states such as Haryana, Rajasthan, Uttar Pradesh, and Maharashtra.

Oswal Pumps operates in a highly competitive market, with peers such as Kirloskar Brothers, Shakti Pumps, WPIL, KSB, and Roto Pumps.

The upcoming IPO will be managed by prominent financial institutions, including IIFL Securities, Axis Capital, CLSA India, JM Financial, and Nuvama Wealth Management. These entities are responsible for guiding the IPO process, from regulatory approvals to the listing of shares on the exchanges.