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    Welspun Corp

    WELCORPGood
    Capital Goods·6 Feb 2025
    Management Summary

    Welspun Corp delivered a resilient Q3 FY25 performance characterized by strong volume growth in line pipes and TMT bars, alongside significant debt reduction. The company is confidently on track to exceed its annual EBITDA guidance for the second consecutive year, supported by a massive ₹15,000 crore order book. Management is aggressively expanding into Saudi Arabia and the US, while diversifying into plastic pipes and specialty steel to drive long-term value.

    Highlights

    8

    • Consolidated EBITDA of ₹478 crores for Q3, showing consistent sequential improvement over the last three quarters.

    • 9M FY25 EBITDA reached ₹1,356 crores, putting the company on track to surpass its full-year guidance of ₹1,700 crores.

    • Robust total order book exceeding ₹15,000 crores across all segments.

    • Line pipe sales volume in India and US rose 16% QoQ to 235,000 tons; order book stands at 866,000 tons (₹12,000+ crores).

    • Net debt significantly reduced to ₹104 crores, with an extremely low Net Debt-to-EBITDA ratio of 0.06x.

    • TMT sales grew 51% QoQ to 62,000 tons, achieving the highest quarterly sales in the Rebar segment.

    • DI Pipe order book remains strong at 350,000 tons (₹2,700 crores), providing visibility for the next four quarters.

    • ROCE for the 9M period stood at 15% against a full-year guidance of 20%.

    Key financials

    Metrics

    6

    Periods

    2

    Headline

    5
    • EBITDA
      ₹478 Cr
    • Adjusted PAT
      ₹297 Cr
    • EBITDA Margin
      13%
    • Net Debt
      ₹104 Cr
    • Net Debt-to-EBITDA
      0.06 x

    9M

    1
    • ROCE
      15%

    Segment breakdown

    Sales VolumeOrder BookQoQ Volume Growth
    Line Pipes (India & US)2,35,000 tons8,66,000 tons16%
    DI Pipes—3,50,000 tons—
    Stainless Steel (SS Bar & Pipes)5,000 tons4,200 tons28.0%
    Building Materials (TMT)62,000 tons—51%
    Sintex———
    Heatmap· 3 shared metrics

    Guidance & targets

    7
    CategoryTargetPriority
    Profitability
    Consolidated EBITDA
    >₹1,700 crores
    		High
    Margin
    ROCE
    20%
    		Medium
    Debt
    Net Debt-to-EBITDA
    <0.5X
    		High
    Capacity
    Saudi L-SAW Plant Operational
    Q4 FY26
    		High
    Capacity
    Saudi DIP Plant Operational
    Q1 FY27
    		High
    Market Share
    Plastic Pipes Market Share
    5%
    		Medium
    Volume
    Saudi Plant Volume (L-SAW + DIP)
    150,000 - 200,000 tons
    		Medium

    Risks & concerns

    4
    RiskSeverity

    Slowdown in Indian Government CAPEX

    Management admitted a dip in Indian orders last quarter due to budget anticipation and cash crunch, but claims this has now been corrected. — Both acknowledged

    medium

    Raw Material Price Lag (Coking Coal)

    Benefits from lower coking coal prices have a lag effect and will reflect in earnings in subsequent quarters rather than immediately. — Analyst acknowledged

    low

    US Import Duties (Mexico/Canada)

    Management believes potential duties on Mexico/Canada imports won't impact them as the US market is already well-protected for local producers like Welspun. — Analyst downplayed

    low

    Areas of Evasion(1)

    • Specific details of cancellation policies were deferred to 'offline' discussions.

    Q&A highlights

    3

    “We are aiming of close to, let's say, 150,000 tons to 200,000 tons of pipes, both in the L-SAW and the DIP sector [in the first year].”

    Provides specific volume expectations for the new ₹1,700 crore Saudi investment, which is a key growth driver.

    asked by Aditya Vilekar, Axis Securities

    2 min read5 chapters

    Detailed Narrative

    01

    US Market Visibility and Deregulation Tailwinds

    The US line pipe business is currently booked for the next six to seven quarters, providing exceptional revenue visibility. Management noted that the new US administration's focus on deregulating the oil and gas sector has significantly improved the outlook for new projects. The company's US mill is in a 'pole position,' and they are actively participating in multiple new opportunities that are expected to crystallize in the coming weeks.

    02

    Strategic Expansion in Saudi Arabia

    Welspun is investing approximately ₹1,700 crores in Saudi Arabia to set up a 350,000-ton longitudinal (L-SAW) plant and a DI Pipe (DIP) plant. The L-SAW plant is expected to be operational by March 2026, followed by the DIP plant in June 2026. Management anticipates a quick payback of 3-4 years, driven by massive local demand from Saudi Aramco and the $80 billion water infrastructure allocation under Vision 2030.

    03

    India Water Sector: The Next Growth Engine

    A massive opportunity is emerging in India's water sector through river-linking projects like Ken-Betwa and PKC, which require large-diameter H-SAW pipes. Management expects these mega-projects to kick-start demand from the next financial year. Additionally, the extension of the Jal Jeevan Mission (JJM) to 2028 and an enhanced outlay of ₹67,000 crores in the latest budget have addressed previous concerns regarding fund availability for DI pipes.

    04

    Diversification into Building Materials and Plastic Pipes

    The company is successfully diversifying beyond its core pipe business. TMT bar sales reached a record 62,000 tons in Q3, and the Sintex brand is showing mid-teens growth in its premium portfolio. A major foray into plastic pipes is scheduled for Q1 FY26, with manufacturing plants in Bhopal and Chhattisgarh. The company aims to capture a 5% market share in the plastic pipe segment over the next 3-5 years.

    05

    Financial Strength and De-leveraging

    Welspun Corp has maintained a disciplined approach to capital allocation, reducing net debt to just ₹104 crores despite ongoing CAPEX. With a Net Debt-to-EBITDA ratio of 0.06x, the company has significant headroom for growth. Management reiterated their commitment to remaining a 'net cash' company and stated that their internal target is to never exceed a 0.5x Net Debt-to-EBITDA ratio.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.