According to the Fallout 4 wikia:
- Every 24 hours, a settlement with a non-zero population will produce 1 purified water per unit of water production. This water will be stored automatically in the settlement's workshop.
- Water will not be automatically produced at any settlement whose workshop contains more than 5 drink items (including items that cannot be produced by settlement resources, like dirty water, alcohol, etc). This cap on production increases by 1 per every 4 units of settlement population.
This suggests that with a settlement of 20 people, you would have a cap of 10 drinkable items. If your daily production (the 'water' value displayed in workshop mode) is above 10, your settlement would only produce water for one day, then stops, because the limit has been reached.
But, it will only check wether this limit has been reached every day, so for example if you have 10 industrial purifiers, your settlement will produce 10*40=400 water on one day, and nothing on the next day, because the limit has been reached.
So yes, there is a cap on how much water one settlement will produce over time, but more water purifiers will reward you with more water.