Industry Overview

Indian Solar Pump Market The solar pump market in India was valued at Rs 16,450 cr in Fiscal 2025 and it is expected to grow at a CAGR of 11% between Fiscal 2025 and Fiscal 2030 to reach Rs 27,110 cr by Fiscal 2030. The PM Kusum Scheme targets the installation of 1.40 million standalone solar water pumps in off-grid areas to provide energy security for farmers, reduce the consumption of diesel, promote the use of renewable energy in the agricultural sector and reduce environmental pollution. As of March 31, 2025, 0.12 cr turnkey solar pumps have been sanctioned by the Government, of which, 0.08 cr solar pumps have been installed. In addition, the PM Kusum Scheme focuses on the solarization of 0.35 cr existing grid-connected agricultural pumps and provides subsidies to individual farmers who have grid-connected pumps to retrofit their pumps with solar panels. India has a vast potential for installation of solar pumps. There are 14.4 cr farmers in India, of which approximately 3 cr farmers have access to water pumps powered by electricity, diesel, or solar energy. 30% of the farmers are currently using diesel-powered pumps, while the remaining 11.4 cr farmers do not have access to pumps and among these, 70% of farmers reside in areas with limited access to natural water sources such as canals or rivers. This presents an opportunity for the widespread adoption of solar pumps to address the unmet agricultural water needs of a significant portion of India’s farming community.

Large Replacement Pump Market in India Almost 60% of the total irrigated area in India relies on groundwater pumping. India currently has approximately 2.16 cr groundwater pumps in operation, with electric pumps comprising a substantial majority at approximately 77%, followed by diesel pumps at 22%. These pumps typically undergo replacement every 5 years, offering growth opportunities to replace grid-connected and diesel-fed pumps with solar powered agricultural pumps. Solar pumps offer several benefits compared to traditional diesel-fed and grid-connected pumps, including reduced dependency on grid power, cost-effectiveness for farmers in view of rising diesel prices, low maintenance costs, increased reliability and environmentally friendly operations. The replacement pump market in India is estimated to be around approx. Rs 8,000 cr in Fiscal 2025, highlighting the potential for the replacement of existing pumps which is expected to rise further to Rs 15,000 cr by Fiscal 2030 growing at CAGR of approximately 13.4%.

Global Solar Pump Market The global solar pump market was Rs 30,000 cr in 2024 and is expected to grow at a CAGR of 19.5% between 2024 and 2029 to reach Rs 70,000 cr by 2029. This growth is attributed to several factors, including increasing government support through subsidies, energy efficiency and cost savings offered by solar pumps, and concerns regarding water scarcity, climate change and erratic rainfall. The need to reduce reliance on diesel pumps, government subsidies offered in various nations such as the PM KUSUM Scheme of India, Rural Energy for America Program of the USA and Solar rebate Program of UAE, lower operating expenses compared to traditional pumps and adoption in remote areas with limited grid coverage are driving the demand for solar pumps.

Peer Comparison

Key Risks & Concerns

High dependency on the PM Kusum Scheme:

• A significant portion of the company’s revenue is derived from Turnkey Solar Pumping Systems supplied under the PM Kusum Scheme. However, the business remains vulnerable to changes in government policy or tender outcomes, which could materially impact its operations.

Customer concentration risk:

• The business relies heavily on its top 10 customers, who contributed over 78% of its revenue in the nine months ending December 31, 2024. Any loss or reduction in orders from these key clients could significantly impact their operations, financial performance, and cash flows.

Dependence on copper and solar cell supply:

• The company’s profitability is closely tied to the availability and pricing of copper and solar cells, critical raw materials for its products. Any supply disruptions, price volatility, or challenges in sourcing quality solar cells, especially given its limited procurement experience, could adversely affect their production quality, working capital, and overall financial performance.

Export exposure and regulatory risks:

• The company exports to over 22 countries, contributing between 3.70% and 11.64% of its revenue from operations in recent years. Its international revenue may face risks from economic slowdowns, regulatory changes, trade barriers, or increased duties in export markets, potentially affecting its financial performance and global competitiveness.

Outlook and Valuation

Oswal Pumps Ltd. (OPL) showcases strong growth potential and strategic positioning with its deeply integrated business model across pump and solar module manufacturing. The company is among India’s few end-to-end Turnkey Solar Pumping System providers, with vertically integrated capabilities in pumps, solar modules, VFDs, and mounting structures. Their backward integration strategy has helped drive operating efficiencies and enhance margins. The company has expanded capacity significantly, with its solar module capacity already at 570 MW as of Dec 2024 and another 1,500 MW expansion underway. Over FY22–FY24, OPL reported a remarkable Revenue/EBITDA/PAT CAGR of 45.1%/97.4%/140.2%, showcasing both top-line growth and margin expansion. Additionally, the company boasts an impressive order book of Rs 1,100 cr (~0.8x of 9MFY25 revenue) and a strong bid pipeline of Rs 3,200 cr, ensuring near-term visibility. The Karnal-based manufacturing facilities, one of India’s largest single-site units, further enhance operational readiness.

OPL has emerged as one of the largest suppliers of solar-powered agricultural pumps under the PM Kusum Scheme, supplying ~38% of the 0.61 million pumps installed in India by Dec 2024. This dominance stems from their ability to deliver Turnkey Solar Pumping Systems directly and indirectly under the scheme. Revenues from PM Kusum-related orders formed ~85% of operational revenues in FY24 and 9MFY25, establishing their positioning in a government-supported, high-growth segment. Their distribution network doubled from 473 distributors in FY22 to 925 by Dec 2024, including the ‘Oswal Shoppe’ retail concept, enhancing brand visibility and direct market access. Internationally, they’ve exported to 22 countries across MENA and APAC regions. OPL’s focus on further geographical expansion, increasing its footprint in South India, and new product launches in industrial pumps and electric motors augur well for revenue diversification. The company’s proven execution, brand presence, and ability to secure repeat orders strengthen its long-term fundamentals. The valuation, supported by rapid growth and an expanding product portfolio, offers an attractive entry point.

OPL’s operational performance is backed by its strategic focus on automation, in-house production, and continual expansion. Plans to manufacture key solar module components like EVA sheets, junction boxes, and aluminium extrusion frames highlight their aggressive backward integration strategy. Their manufacturing infrastructure includes advanced CNC and automatic winding machinery, giving them cost, quality, and delivery advantages. The company’s future growth roadmap includes the introduction of new industrial pumps and motors catering to construction and factory needs, reflecting readiness to diversify beyond agriculture. With an experienced leadership team and a robust engineering division, OPL is positioned to deliver innovative, cost-effective, and high-quality products. Their ISO-certified facilities ensure global quality benchmarks and support export growth. Management’s track record in scaling the business efficiently over the last decade and robust design capabilities using CAD and simulation tools further de-risk the business. While the valuation reflects their strong market position and growth trajectory, sustained execution on diversification and working capital management will be crucial. A potential drawback for the business is its reliance on government projects and policies, as well as the delays in cash flow. Given its operational leverage, strong industry tailwinds from solar irrigation, and product pipeline readiness, OPL offers a high-growth opportunity in a structurally sound sector. At the upper price band of Rs 614, the IPO is valued at 9MFY25 annualized P/E of 24.2x. Given the scalable platform, strong execution, and robust margin profile, the valuation appears reasonable. We recommend SUBSCRIBE to the issue for long-term investment horizon.

Key Information

Use of Proceeds: The total issue size is Rs.1,387.34 cr, which comprises fresh issue of Rs. 890 cr (64.15%) and offer for sale of Rs. 497.34 cr (35.84%). The company intends to utilize a portion of the Net Proceeds towards funding certain capital expenditures of the company. (~Rs 89.86 cr), Investment in the wholly-owned subsidiary, Oswal Solar, in the form of debt or equity, for funding the setting up of new manufacturing units at Karnal, Haryana (272.76 cr), pre-payment/ re-payment, in part or full, of certain outstanding borrowings availed by the Company (280 cr), investment in the wholly-owned Subsidiary, Oswal Solar, in the form of debt or equity, for repayment/prepayment, in part or full, of certain outstanding borrowings availed by Oswal Solar (Rs 31 cr), and general corporate purposes.

Book running lead managers: Axis Capital, IIFL Capital, CLSA India, JM Financial, Nuvama Wealth

Management: Vivek Gupta (Chairman and Managing Director), Amulya Gupta (Whole-time Director), Shivam Gupta (Whole-time Director), Sandeep Garg (Independent Director), Kanchan Vohra (Independent Director), Vikas Modi (Independent Director), Anish Kumar (Company Secretary and Compliance Officer), Subodh Kumar (Chief Financial Officer)