Oswal Energies Limited IPO

01At a glance

What the company does — an integrated EPC company and maker of process equipment and packages for the energy sector, mainly oil and gas, in two divisions: the Project Division, which builds surface facilities, early production facilities, pipeline networks, gas-processing plants and cross-country pipelines in India; and the Heavy Engineering Division, which makes process equipment, skids and packages at one plant in Gandhinagar, Gujarat (DRHP p.29).

Who pays it — oil and gas operators and engineering companies; the largest client was 47.40% of FY25 revenue, the top three 85.76% and the top ten 99.53% (DRHP p.45). Public-sector undertakings were 26.21% and exports 16.49% (DRHP p.45, DRHP p.452). Named customers include Frontier Petroleum Services, Vedanta, Synergia Energy, Sun Petrochemicals, Thermax, Fives India Engineering & Projects and Koerting Engineering (DRHP p.452).

Why it is raising money — ₹1,771.33 million for long-term working capital and the rest for general purposes (DRHP p.31).

How fast it has grown — revenue from ₹1,600 million in FY23 to ₹2,560 million in FY24 and ₹4,109 million in FY25 (DRHP p.33).

The one thing to understand — large reported profits that have not yet turned into cash, from a handful of clients. Profit over FY23 to FY25 totalled ₹1,012.12 million against operating cash flow of ₹40.40 million, and in FY25 trade receivables rose by ₹832.96 million and inventories by ₹556.54 million (our arithmetic, DRHP p.33, DRHP p.60, DRHP p.477). EBITDA margin rose from 6.11% to 22.14% in two years (DRHP p.138).

02The business, in plain words

An oil and gas EPC contractor designs a production or processing facility, procures the pipes, valves, instruments and equipment, builds and commissions it at the field, and is paid by the operator under the contract. The equipment division makes process equipment, skids and packages to order.

An upstream oil producer needs surface facilities at a field → it awards the EPC contract to Oswal → Oswal designs the facility, procures materials and equipment and builds it on site → the producer pays under the contract terms.

Order book was ₹8,357.70 million at March 2025 (DRHP p.138).

Earnings equation: Profit ≈ contract value × (price − materials, equipment and site costs) − overheads − interest. EBITDA margin was 22.14% in FY25 (DRHP p.138).

03Where the money comes from

Source: DRHP p.45, DRHP p.452.

04The growth record

Source: DRHP p.33, DRHP p.60, DRHP p.138.

05What the growth is made of

Larger contracts and a higher margin. The company executed 12 projects worth ₹4,108.74 million in FY25 against 15 worth ₹2,560.37 million in FY24 (DRHP p.473). Revenue from the largest client rose from ₹870.95 million to ₹1,947.58 million, and from PSUs from ₹367.43 million to ₹1,076.73 million (DRHP p.45). The pages read do not explain the rise in margin.

06Earnings quality

Weak cash conversion. Operating cash flow of ₹40.40 million over three years compares with profit of ₹1,012.12 million (our arithmetic, DRHP p.33, DRHP p.60). Net working capital rose from 49 days in FY24 to 115 days in FY25 (DRHP p.138). In FY25, receivables rose ₹832.96 million and inventories ₹556.54 million, partly offset by a ₹932.35 million rise in short-term provisions (DRHP p.477). FY25 profit was after a ₹68.08 million fair-value loss on investments (DRHP p.477).

07The balance sheet

Source: DRHP p.33, DRHP p.138. Share capital rose from ₹43.33 million to ₹476.65 million through a ten-for-one bonus issue in November 2024 (DRHP p.33, DRHP p.34).

08What the money is for

Source: DRHP p.31.

09Who is selling

Source: DRHP p.30, DRHP p.31, DRHP p.32. The last row is our arithmetic. The shares offered are 9.65% of the company (our arithmetic). The promoters' average cost of acquisition is ₹0.27 to ₹1.07 a share, after the bonus issue (DRHP p.41).

10Promoters

The promoters are Dixit Jitendra Bokadia, Jayant Babulal Bokadia, Ratan Babulal Bokadia, Ratan Babulal Bokadia (HUF) and Jayant Babulal Bokadia (HUF), who hold 42.99% (DRHP p.30, DRHP p.31). No proceedings are listed against the promoters (DRHP p.35).

11Who already owns it

Source: DRHP p.31, DRHP p.32. The second and last rows are our arithmetic. There are no shareholders outside the promoters and promoter group (DRHP p.33).

12What changed just before the IPO

• Bonus issue — ten shares for every one held, November 2024 (DRHP p.34).
• Margin — EBITDA margin up from 14.60% to 22.14% in FY25 (DRHP p.138).
• Order book — up from ₹4,898 million to ₹8,358 million (DRHP p.138).

13Capacity and expansion

One plant in Gandhinagar with 2,000 tonnes a year of installed capacity in each of the three years (DRHP p.29). The proceeds fund working capital, not capacity (DRHP p.31).

14Market size and industry structure

The D&B report cited in the offer document describes the Indian energy and oil and gas sector and names Anup Engineering, Deep Industries, Patels Airtemp and Lloyds Engineering Works as competitors (DRHP p.30). The summary read gives no market figures.

15Competitive position

What the document claims, and what it rests on:

• One-stop service — engineering, procurement, fabrication and construction (DRHP p.29).
• Certifications — ISO certifications and ASME "U" and "U2" stamps for the plant (DRHP p.29).
• Exports to nine countries (DRHP p.29).

Against that: near-total dependence on ten clients, one plant, the upstream oil and gas cycle, and cash tied up in working capital (DRHP p.35, DRHP p.45, DRHP p.138).

16Peers the company named

Source: DRHP p.137. The peers' average P/E is 30.09 (DRHP p.136).

No P/E is possible for the company until a price band is set.

17Risks, in plain words

• Clients. Ten clients were 99.5% of FY25 revenue, one of them 47% (DRHP p.45).
• Cash. Operating cash flow a fraction of profit (DRHP p.60).
• One sector. Heavily dependent on upstream oil and gas (DRHP p.35).
• Raw materials. Steel, pipes and fittings prices (DRHP p.35).
• Contract penalties. Liquidated damages and bank-guarantee invocation (DRHP p.36).

18Litigation and regulatory matters

Source: DRHP p.34.

19Related-party transactions

Not read in detail for this study.

20What the offer document does not say

In the sections read for this study, the document does not give:

• Who the largest client is, providing ₹1,947.58 million in FY25, in the pages read.
• What the ₹932.35 million rise in short-term provisions is for, in the pages read.
• Why EBITDA margin rose from 6% to 22%, in the pages read.
• What the criminal and civil proceedings against the company concern, in the pages read.
• The price band, lot size or issue dates, which is normal at DRHP stage.

21Five questions for management

1. When will receivables of FY25 be collected, and from whom?
2. What are the ₹932 million of short-term provisions?
3. Is a 22% EBITDA margin repeatable on the current order book?
4. How much of the ₹8,358 million order book is with the largest client?
5. Why do family members offer shares while the company raises working capital?

1Sources and cited facts

This study was read from 1 document the company filed. The 31 figures it cites are listed under the document each came from, with the page and the sentence as printed.