The story
KUSUM 2 hasn't come yet. That's why we're here.
The stock declined 54% from its FY25 peak primarily because PM-KUSUM 2 failed to arrive on schedule — not because of receivables. The market de-rated Oswal from ₹793 to ₹290 by March 2026, pricing a 22% ROE business at barely 2× book.
Yet the underlying business strengthened. FY26A revenue reached ₹2,064 crore — the highest in company history, up 44% year on year. EBITDA margin held at 24.9% despite competitive tender pricing. PAT grew 34% to ₹376 crore. The order book exited at 19,912 executable pumps plus 25,000+ in pipeline. Net debt fell to ₹135 crore with a 0.08× net debt-to-equity ratio.
The company used the waiting period strategically. A ₹350 crore FY27E capex programme — 2.1 GW module capacity, aluminium extrusion, EVA encapsulant, and 5 lakh pump capacity — was designed specifically for KUSUM 2 volumes. When the scheme launches, Oswal enters with cost advantage, delivery capacity, and MNRE empanelment intact.
FY26 full year & Q4 result
A record year — closed with the number that mattered most.
| Metric | Value | Notes |
|---|---|---|
| FY26A Revenue | ₹2,064 Cr | +44.3% YoY, highest in company history |
| FY26A EBITDA | ₹514 Cr | 24.9% margin; FY27E: 26.5% |
| Q4 OCF | +₹171 Cr | First positive quarter after 3 years |
| FY26A PAT | ₹376 Cr | +34.1% YoY; EPS ₹34.73 |
| Net Debt | ₹135 Cr | ND/E 0.08×; ₹311 Cr high-cost debt repaid |
| Order Book | 19,912 | Executable pumps + 25K+ pipeline |
The ₹171 crore that changed the story
Operating cash flow ran negative for three consecutive years (FY24: −₹177 crore; FY25: −₹440 crore; FY26 full year: −₹571 crore). Every quarter of FY26 showed negative OCF — until Q4 produced +₹171 crore, the single most important financial event of this reporting cycle.
The driver: trade receivables fell ₹249 crore in Q4 alone as Maharashtra and Karnataka state nodal agencies released payments. An additional ₹116 crore was collected on April 2, 2026. Management confirmed all outstanding receivables carry full security with government-backed documentation.
The market was wrong about this. The receivables concern that drove the stock from ₹793 to ₹290 assumed a permanent structural problem. Q4 FY26 demonstrates it was a timing issue with state agency payment cycles. As PM-KUSUM 2 implementation brings 30–40 day improvements in payment terms, the cash profile will look fundamentally different by FY28.
Backward integration: on track and delivering
- Solar module capacity: 0.6 GW expanding to 1.0 GW by Q1 FY27, then 2.1 GW total by Q3 FY27. DCR certification maintained — critical for KUSUM 2 eligibility.
- Aluminium extrusion + EVA: largely fulfilled by Q3 FY27 per management. Combined ₹1,100–1,200 per pump saving. At 1.15 lakh annual pumps: ₹127–138 Cr gross margin uplift at steady state.
- Solar inverters: assembly starting within months; full internal production within 6–7 months.
- Non-pump solar: 300 MW combined pipeline across rooftop + utility + C&I. Target: ₹1,000 Cr FY27E contribution.
Why we own it
Strong business. Depressed multiple. Clear catalyst.
Oswal carries a KUSUM 2-linked call, but the underlying business quality — high margins, strong ROE, deep vertical integration, a solid balance sheet — justifies the conviction. The market values Oswal at 2.4× book despite 22% ROE, 25% EBITDA margins, ₹2,064 Cr revenue, and a 19,912-pump executable order book. The discount exists purely because KUSUM 2 has not been announced. A 22%+ ROE business with a visible multi-year growth programme does not deserve to trade at 2× book. The ₹846 target implies 4.2× FY27E book — a level we think is fair, not aggressive.
