Welspun Corp — Q3 FY25 earnings call

Call held 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

  • 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

2 periods

Headline

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

9M

  • ROCE
    15%

What they filed

Q1 FY27: revenue down 14.3%, net profit down 54.5% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue2,033 2,449 2,281 1,828 1,822 −10%2,378 −3%2,270 −0%1,567 −14%
EBITDA191 268 244 236 188 −2%265 −1%334 +37%173 −27%
Net profit108 156 464 255 366 +239%161 +3%232 −50%116 −55%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

SegmentSales 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%
Building Materials (TMT)62,000 tons—51%
Sintex———

Guidance & targets

Profitability

  • Consolidated EBITDA Profitability · FY25 · High confidence >₹1,700 crores

    Previously ₹1,700 crores → >₹1,700 crores

    This is clearly indicating that we will surely surpass our guidance for the second consecutive year and against all the global challenges and concerns.

    — Vipul Mathur, MD & CEO

Margin

  • ROCE Margin · FY25 · Medium confidence 20%
    The ROCE for the nine-month period stood at 15% against our full year guidance of 20%.

    — Vipul Mathur, MD & CEO

Debt

  • Net Debt-to-EBITDA Debt · Any point in time · High confidence <0.5X
    But internally we are keeping a target that our net debt-to-EBITDA at any point in time should not exceed 0.5X.

    — Vipul Mathur, MD & CEO

Capacity

  • Saudi L-SAW Plant Operational Capacity · Q4 FY26 · High confidence Q4 FY26
    We are hoping that this plant to be operational in the fourth quarter of FY'26.

    — Vipul Mathur, MD & CEO

  • Saudi DIP Plant Operational Capacity · Q1 FY27 · High confidence Q1 FY27
    We will be ready with this Greenfield facility in the very first quarter of FY'27.

    — Vipul Mathur, MD & CEO

Market Share

  • Plastic Pipes Market Share Market Share · next 3-5 years · Medium confidence 5%
    So, on the plastic pipe business, we have an aspiration to target over the next three to five years a 5% market share and that's what we are trying to do.

    — Ashish Prasad, CEO of Sintex BAPL

Volume

  • Saudi Plant Volume (L-SAW + DIP) Volume · First year of operations · Medium confidence 150,000 - 200,000 tons
    I think looking at almost in the very first year of operations, 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.

    — Vipul Mathur, MD & CEO

Risks & concerns

  • Slowdown in Indian Government CAPEX

    medium

    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

  • Raw Material Price Lag (Coking Coal)

    low

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

    Analyst acknowledged

  • US Import Duties (Mexico/Canada)

    low

    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

Areas of evasion (1)

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

Q&A highlights

2 direct
Saudi Plant Volume and Timeline Direct
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

US Order Security and Cancellation Policy Partial
All the US contracts are with appropriate cancellation clause... whatever exposure on the steel we take, they are completely funded by the buying entity.

Addresses investor concerns about the risk of project deferrals or cancellations in the US market under a new administration.

Asked by Muskan Rastogi, B&K Securities

Indian Line Pipe Demand and Market Share Direct
At this point in time, we are seeing demands coming up from BPCL, HPCL and IOCL... I am very confident that there will be uptick in the demand in the next financial year.

Confirms that the temporary slowdown in Indian government orders is reversing, with major PSU projects expected in Q1 FY26.

Asked by Amit Lahoti, Emkay Global

2 min read 5 chapters

Detailed narrative

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.

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.

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.

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.

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.

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