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    OSWALPUMPS

    OSWALPUMPSGood
    Capital Goods·14 Nov 2025
    Management Summary

    Oswal Pumps reported robust revenue growth in Q2 FY26, driven by PM KUSUM and Magel Tyala orders. However, margins faced pressure due to competitive L1 pricing and one-time expenses, though management expects recovery in Q3 and Q4. The company maintains a strong order book and is aggressively expanding capacity, while addressing working capital challenges related to government payment cycles.

    Highlights

    8

    • Operating revenue for Q2 FY26 stood at ₹540 crores, reflecting a strong 73.9% YoY growth and 5% QoQ growth.

    • Operating EBITDA for the quarter was ₹128 crores, growing 26.5% YoY but declining 9.1% QoQ.

    • Operating EBITDA margin for Q2 FY26 was 23.7%, experiencing a 3.68% QoQ decline due to L1 pricing and one-time factors.

    • PAT for Q2 FY26 was ₹98 crores, up 48.3% YoY and 3% QoQ, with a PAT margin of 17.8%.

    • The company reported a strong order book exceeding 18,800 pumps and a near-term pipeline of over 30,000 pumps.

    • Receivable days increased to 138 days as of September 2025, up from 126 days in June 2025, primarily due to PM KUSUM payment terms and bank loan disbursement delays.

    • Oswal Pumps aims to achieve 5 lakh pumps capacity by H1 FY27 and targets 1 lakh to 1.10 lakh solar pump installations in FY27.

    • Full year FY26 turnover is expected to be around ₹2,200 crores, with revenue growth guidance of 50%-60%.

    What Changed2

    vs Q3 FY26

    Guidance items11 → 15 (+4)Risks discussed3 → 4 (+1)

    Key financials

    Single quarter

    06 metrics
    1. 01Operating Revenue₹540 Cr+73.9%YoY
    2. 02Operating EBITDA₹128 Cr+26.5%YoY
    3. 03Operating EBITDA Margin23.7%-3.7%QoQ
    4. 04PAT₹98 Cr+48.3%YoY
    5. 05PAT Margin17.8%

    Guidance & targets

    15
    CategoryTargetPriority
    Revenue
    Revenue Growth
    50%-60%
    		High
    Revenue
    CAGR
    30%-35%
    		High
    Revenue
    Full Year Turnover
    ₹2,200 crores
    		High
    Margin
    Operating EBITDA Margin Recovery
    1.8%
    		High
    Margin
    Cost Saving
    100 bps
    		High
    Margin
    Operating EBITDA Margin
    25.5%-26%
    		High
    Margin
    Operating EBITDA Margin
    26.25%-26.75%
    		High
    Profitability
    PAT Margins
    17.5%-19%
    		High
    Order Book
    Order Book (Pumps)
    18,800
    		High
    Order Book
    Near-term Pipeline (Pumps)
    30,000
    		High
    Capacity
    Solar Module Capacity in Operation
    0.75 MW
    		High
    Capacity
    Solar Module Capacity in Operation
    0.75 MW
    		High
    Capacity
    Total Pump Capacity
    5 lakh
    		High
    Volume
    Pumps Installed
    65,000-75,000
    		High
    Volume
    Solar Pump Installation
    1 lakh-1.10 lakh
    		High

    Risks & concerns

    4
    RiskSeverity

    Margin pressure from competitive L1 pricing in government tenders

    L1 prices in PM KUSUM and Magel Tyala tenders fell by 7.5%, impacting over 80% of core revenue, but mitigated by value engineering. — Management acknowledged

    medium

    Working capital deterioration due to extended receivable days

    Receivable days increased to 138 days (from 126) due to PM KUSUM payment terms (90-day operation requirement) and temporary bank loan disbursement delays, expected to improve. — Management acknowledged

    medium

    Impact of new EPC players and price competition on tender rates

    Increasing number of EPC players has led to a 10-11% reduction in tender prices, which will have some effect, but Oswal's backward integration helps. — Both acknowledged

    medium

    Raw material price volatility

    Analyst raised concern about raw material price increases; management stated prices are not expected to go down and backward integration helps mitigate impact. — Analyst downplayed

    low

    Q&A highlights

    3

    “Even then, in today's date, the state governments like for instance, if we talk about Maharashtra, in Maharashtra, Magel Tyala state government has continued its orders and tenders. So there, because of PM KUSUM 2, the orders are not going to be delayed nor are they happening.”

    Addresses investor concerns about potential growth slowdown if the next phase of the key government scheme (KUSUM 2) is delayed, highlighting continued state-level orders.

    asked by Prit Nagersheth

    3 min read6 chapters

    Detailed Narrative

    01

    Q2 FY26 Financial Performance Overview

    Oswal Pumps reported a robust Q2 FY26 with operating revenue of ₹540 crores, marking a significant 73.9% year-on-year growth and a 5% quarter-on-quarter increase. Operating EBITDA stood at ₹128 crores, growing 26.5% YoY, but saw a 9.1% QoQ degrowth. Profit after tax (PAT) was ₹98 crores, up 48.3% YoY and 3% QoQ, resulting in a PAT margin of 17.8% for the quarter.

    02

    Margin Dynamics and Recovery Outlook

    The operating EBITDA margin for Q2 FY26 was 23.7%, experiencing a 3.68% quarter-on-quarter decline. This was primarily attributed to a 7.5% fall in L1 prices for PM KUSUM and Magel Tyala tenders, affecting over 80% of core revenue, and one-time📎 factors including ₹40 crores of lower-margin module sales and a ₹2.5 crores subsidiary capital increase expense. Management expects to recover the 1.8% margin decline in Q3 FY26 and targets operating EBITDA margins of 25.5%-26% for Q3 FY26 and 26.25%-26.75% for Q4 FY26, supported by value engineering and cost savings of at least 100 basis points by Q4 FY26.

    03

    PM KUSUM and Order Book Strength

    The sustained revenue momentum was driven by the continued execution of PM KUSUM and Magel Tyala orders. As of October 31, 2025, Oswal Pumps had successfully executed over 80,000 solar pumping systems. The company boasts a strong order book exceeding 18,800 pumps and a near-term pipeline of over 30,000 pumps across major states, positioning it well to achieve its FY26 targets. Management anticipates the launch of PM KUSUM 2 before the fiscal year-end, which is expected to provide further opportunities.

    04

    Capacity Expansion and Future Growth

    Oswal Pumps is aggressively expanding its manufacturing capabilities, targeting a total pump capacity of 5 lakh units by H1 FY27. For FY26, the company expects to install 65,000 to 75,000 pumps. Looking ahead to FY27, the visibility for solar pump installations is projected at 1 lakh to 1.10 lakh units. The solar module expansion project is being relocated to an adjacent land parcel, offering significant logistical benefits and enhanced operational efficiencies, with 0.75 MW expected to be operational in FY26 and another 0.75 MW in the next fiscal year.

    05

    Working Capital Management

    Receivable days increased to 138 days as of September 2025, up from 126 days at the end of June 2025. This rise was primarily due to PM KUSUM and Magel Tyala payment terms, which link disbursements to RMS data after 90 days of pump operation, and temporary delays in bank loan disbursements. Management expects the situation to improve in the current quarter as the monsoon season ends and loan disbursements are completed within 10-15 days. The company reported a net debt position of ₹38 crores at quarter-end.

    06

    Competitive Landscape and Entry Barriers

    Management acknowledges a strong entry barrier for fully backward-integrated players like Oswal Pumps, which manufactures pumps, motors, controllers, and solar modules in-house. However, the increasing number of EPC (Engineering, Procurement, and Construction) players, particularly regional ones, has led to a 10-11% reduction in tender prices. Despite this, Oswal's deep backward integration and focus on value engineering are expected to maintain its competitive edge and superior margins compared to peers.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.