Welspun Special.

Welspun Specialty Solutions reported a robust Q2 FY26, with revenue reaching INR 243 crores, marking a 40% year-on-year and 15% quarter-on-quarter growth. EBITDA more than doubled year-on-year to INR 18.1 crores, growing 29% sequentially. The company also achieved a profit after tax of INR 9.6 crores, a significant turnaround from a loss of INR 6.4 crores in the same period last year and INR 8 crores in Q1 FY26. Finance costs declined sharply by 59% both YoY and QoQ, reflecting improved financial discipline.

The company witnessed strong volume growth, with stainless steel seamless pipe sales achieving an all-time high, growing 30% year-on-year in Q2 FY26. The stainless steel bars segment also saw substantial growth of 80% year-on-year. The order book at the end of Q2 FY26 remained strong at approximately 6,000 metric tons, valued at INR 254 crores, with a roughly 50-50 volume split between tubes and bars. The average order inflow has been flat at INR 200 crores per quarter, but management expects improvement in the near term.

Welspun Specialty is actively pursuing strategic initiatives, including the bright bar project, which is on schedule for commissioning in Q3 FY26. This project, part of an overall INR 75 crore capex for upgradations, aims to enhance value-added product capabilities by converting black bars to bright bars. The IBR accreditation process for chrome alloy steel bars and tubes is also expected to complete in Q3 FY26. Furthermore, the company significantly increased its renewable electricity consumption from 31% in FY25 to approximately 50% in H1 FY26, demonstrating its commitment to sustainability and operational efficiency.

Management noted ongoing price pressure in the steel market, particularly on the bar side, leading to a decline in gross profit per metric ton to INR 83/kg from INR 100/kg. However, they believe the market is at a bottom and expect improvement with better demand. The reduction in Chinese imports due to anti-dumping duties has created opportunities for domestic players, though global protectionist measures continue to impact export sales. The overall economic activity is a key factor affecting market conditions.

The company experienced a significant decline in its export mix, with steel exports falling from 35-40% in FY25 to 15-20% this year, and pipe exports dropping from 15-20% to less than 10% in H1. This shift is attributed to global tariff actions and protectionism, leading to increased focus on the buoyant domestic market. Key domestic demand drivers include the energy sector (thermal, oil & gas, refinery, fertilizer, nuclear power) and B2B segments like forging and component manufacturing, where the company is expanding its customer base.

Welspun Specialty's total saleable capacity for bars is 120,000 tonnes per year, and for cold-finished pipes, it is about 15,000 tonnes. The new bright bar project will not add to overall steelmaking capacity but will enhance value-added bright bar production. The company aims for 80-85% capacity utilization within three years and expects a 25-30% volume improvement over the last year. Management expressed confidence in meeting and exceeding business plans for both stainless steel bar and seamless pipe segments.