Oswal Pumps reported a difficult second quarter in FY27, with consolidated profit after tax falling 59.4% year on year to ₹39.6 crore. Revenue also declined, but the bigger concern was the sharp contraction in operating margins as higher input costs and business expansion expenses affected profitability.

Revenue from operations stood at ₹506.3 crore, down 6.2% from ₹539.6 crore in Q2 FY26. However, revenue improved 6.9% quarter on quarter, indicating some recovery compared with the June quarter.

Total income reached ₹511.8 crore, declining 6.4% year on year but increasing 6.2% sequentially. The company continued executing its solar pump orders despite a competitive pricing environment.

Reported EBITDA declined 53.4% to ₹62.8 crore from ₹134.8 crore a year earlier. The reported EBITDA margin fell to 12.3% from 24.7%, a contraction of approximately 1,239 basis points.

The operating EBITDA picture was also weak. Operating EBITDA, which adjusts for other income, stood at ₹57.4 crore, with a margin of 11.3%. This was down 55.2% year on year.

Profit before tax declined 62.5% to ₹47.4 crore, while PAT attributable to the owners of the parent fell to ₹39.6 crore from ₹97.5 crore. Diluted earnings per share declined to ₹3.34 from ₹8.43.

The sequential comparison also showed pressure. PAT declined 26.4% from ₹53.8 crore in Q1 FY27, while operating EBITDA fell 22.8%. The operating EBITDA margin dropped from 15.7% to 11.3%.

Management provided a breakdown of the margin contraction. Higher raw material costs accounted for approximately 210 basis points of the 437 basis point quarter on quarter decline in operating EBITDA margin.

Aluminium frames, glass and copper became more expensive. Higher zinc and steel costs at subsidiary Walso Solar Solutions also affected profitability, particularly on orders secured when input prices were lower.

The remaining 227 basis points of the quarterly margin decline came from higher employee expenses, project related operating costs and increased provisions against debtors. The company has been strengthening its workforce to support the expansion of its Solar EPC business.

This is an important development because the company is expanding beyond its traditional solar pump manufacturing operations. The additional workforce and project expenses may support future business growth, but they are currently adding pressure to operating costs.

The government led solar irrigation market also faces a timing challenge. Management referred to delays in the rollout of PM-KUSUM 2.0, prompting the company to diversify into rooftop, utility scale and commercial and industrial solar EPC projects.

Oswal Pumps reported a solar pump order book of 9,487 pumps, supported by a near term pipeline of approximately 10,000 pumps. These opportunities include direct PM-KUSUM, Magel Tyala, indirect PM-KUSUM and export markets.

The company is also building a separate Solar EPC business. Its combined rooftop, utility scale and commercial and industrial EPC order book stood at approximately 143 MW, with an additional pipeline of 168 MW.

This diversification could reduce dependence on government led solar irrigation projects over time. However, converting the pipeline into firm orders and completing projects within planned timelines will remain important.

Another major development is the proposed 1.2 GW TOPCon solar cell manufacturing facility at Karnal, Haryana. The project is planned through wholly owned subsidiary Oswal Solar Energy Private Limited and remains subject to shareholders’ approval.

The estimated project cost is approximately ₹455.85 crore. Around ₹296 crore is proposed to be funded through debt, while ₹159.85 crore is expected to come from the reallocation of unutilised IPO proceeds.

The proposed facility is expected to meet approximately 75% of the subsidiary’s solar cell requirements. The company believes this backward integration will improve access to domestic content requirement compliant cells, reduce dependence on external suppliers and support its longer term margin profile.

There is also a balance sheet development worth watching. Total borrowings increased from ₹225.3 crore at March 2026 to ₹535.9 crore at September 2026, while cash and cash equivalents declined from ₹90.7 crore to ₹4.9 crore.

As a result, net debt increased to ₹531 crore. The net debt to equity ratio rose to 0.30 from 0.08 at the end of March, while the net debt to operating EBITDA ratio reached 2.02.

The cash conversion cycle also increased to 257 days at September 2026, compared with 172 days at March 2026. This indicates that more working capital is tied up in the operating cycle, making cash collection and inventory management important areas to monitor.

The first half performance remained weak, with revenue from operations declining 7% year on year to ₹979.9 crore. Operating EBITDA fell 51% to ₹131.7 crore, while PAT declined 51.4% to ₹93.5 crore.

Oswal Pumps now faces two parallel priorities: restoring profitability in its existing business and executing its expansion into Solar EPC and solar cell manufacturing. The order book and diversification plans offer opportunities, but higher debt, working capital requirements and input cost volatility remain important risks. The next few quarters will show whether the company can convert its expanding business platform into stronger margins and cash generation.