Since economic liberalisation in the 1990s, the Indian economy has grown at an impressive rate, and it is currently one of the world’s fastest growing economies. For over two decades, the Gross Domestic Product has grown steadily.

This continuous economic expansion has led to increased urbanisation all over India. As a result, villages are transforming into towns, then into cities, and finally into megacities. Water, the most basic requirement for survival, is anticipated to provide the greatest challenge due to increased demand as populations grow and economies develop, as well as declining resources due to overexploitation and pollution.

The ever-increasing demand for water supply and disposal is driving up demand for pipes and fittings, which serve as the primary means of transporting water and wastewater. Electrosteel Castings, an India-based pipeline solution provider, has a significant presence in the industrial pipes market.

The stock has given multibagger returns over just one year soaring almost 460 percent. When looking at a period of three years, the stock has given a return of a whopping 650 percent. So, let’s delve deeper into the article to assess the future of the company for any investment opportunity.

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Industry Overview of Electrosteel Castings

The domestic DI Pipe Industry’s growth is primarily driven by the expansion of water and sewerage infrastructure in India’s urban, suburban, and rural sectors. With just about 31% of India’s population already urbanized and a high population density, India’s urbanization tendencies have the potential to considerably accelerate, reaching 40% by 2030.

Furthermore, the country suffers significant drinking water supply issues, as well as inadequate water transmission and distribution systems. Only around one-third of Indian dwellings are connected to a sewerage network. 

The use of DI pipes and fittings in a piped irrigation system is another demand driver. To meet this expanding demand, the Indian pipe market has grown at a rate of 10%-12% per year for more than a decade.

Corporate Overview of Electrosteel Castings

Electrosteel Castings is involved in manufacturing ductile iron (DI) pipes, ductile iron fittings, and cast iron (CI) pipes. The company is the first to establish a ductile iron pipe plant in India.Today, it is India’s largest pipeline solutions provider. 

It has a great global brand presence. Since 1994, the company has maintained an advantage over its competitors. Because of the great reliability and longevity of its products, the Company has always been the preferred choice for water engineers and domain specialists in Ductile Iron Pipes and Fittings.

Its manufacturing facilities are scattered across five locations in India, with three in West Bengal and one each in Tamil Nadu and Andhra Pradesh.

Electrosteel Castings’ customers are distributed across numerous sectors and locations, and it serves them through subsidiaries in Europe, North and South America, Southeast Asia, the Middle East, and Africa.

Its significant clients include ISRO, Boeing Corp, Doha Metro, Vikram Sarabhai Space Centre, Pfizer, Hamad International Airport, Kargil, BMW, Ras Abu Aboud Stadium in Qatar, and the French Atomic Centre.

Product Overview of Electrosteel Castings

Ductile Iron (DI) Pipes

The Ductile Iron Pipe Plant produced 715,129 MT of DI Pipes in 2022-23, compared to 603,751 MT in 2021-22. The Company’s DI Pipes are sold in India and abroad to almost 90 countries across five continents.

The primary raw materials utilized in the production of DI Pipes are iron ore and coke. Iron ore for Eastern India operations is mostly sourced from Odisha and Jharkhand. Coke is manufactured in Haldia for the Eastern India operation and at the Srikalahasthi unit for the Southern India operation. Coking coal is mostly imported from Australia. 

Cast Iron (CI) Pipes

The Cast Iron Pipe Plant, which has a total capacity of 90,000 TPA, produced 26,588 MT of CI Pipe in fiscal year 2022-23, compared to 19,049 MT in fiscal year 2021-22. Due to increased demand for Cast Iron Pipes, capacity utilisation was higher than the previous year.

The primary raw material utilised in the production of CI Pipe is pig iron, which is sourced domestically. The Company’s CI Pipe is mostly sold in the southern states of India.

DI Fittings & Accessories

The Company produced 20,343 MT of DI Fittings in Fiscal Year 2022-23, compared to 20,684 MT in Fiscal Year 2021-22. Production, productivity, and overall performance were nearly identical to last year because the Company’s operations and marketing teams focused on forward-thinking efforts.

The company has also made steps to increase productivity and capacity utilisation at its Haldia and Khardah Works, as well as strive to improve the divisions’ performance.

Financials of Electrosteel Castings

Revenue (in ₹crore)7,275.515,280.953,474.202,711.04
Net Profit (in ₹crore)316.23347.57-96.2386.33

In the fiscal year 2023, Electrosteel Castings saw a substantial increase in revenue, surging by 38% to reach ₹7,275.51 crore as opposed to ₹5,280.95 crore in FY2022. Analyzing a span of four years, encompassing FY2020 to FY2023, the company displayed a  Compound Annual Growth Rate (CAGR) of 39% in revenue.

On the other hand, there was a downturn in net profit, experiencing a 9% decrease from ₹347.57 crore in FY2022 to ₹316.23 crore in FY2023. 

The reason was a large increase and fluctuation in input material prices such as coal, iron ore, and consumables. On the other hand, old orders of DI Pipes have had an impact on profitability because production costs have increased while selling prices have remained constant.

Over the cumulative four-year period from FY2020 to FY2023, the net profit showcased 54% CAGR.

In FY23, Electrosteel Castings maintained favourable financial metrics with a Return on Equity (ROE) of 7.45% and Return on Capital Employed (ROCE) of 9.76%.

Future Outlook of Electrosteel Castings

Leading Position with Backward Integrated Plants 

The company has operations in South and East India, allowing it to serve the central, northern, eastern, and southern markets of the country. DI pipes are large and difficult to move across the country. Consequently, markets for all participants are segmented.

Furthermore, with the exception of a coking coal mine and an iron ore mine, ECL’s facilities are entirely backward integrated. The company owns its own coke oven batteries, which transform imported coking coal into coke. The waste heat gases created by the coke oven batteries are used to generate electricity using captive power plants. 

Captive power plants help to significantly reduce power costs. The company also operates a sinter factory, which converts iron ore particles into sinter. This allows the corporation to avoid buying iron ore lumps, which are more expensive than fines.

ECL manufactures its own ferro silicon, which is essential for the production process. The company also manufactures its own cement and paint, as DI pipes require both an interior cement coating and an external paint coating to provide strength and prevent corrosion. This backward integration enables the organisation to remain cost competitive while maintaining product quality standards.

Merger with Srikalahasthi Pipes

Srikalahasthi Pipes Limited has merged with ECL, effective December 31, 2021. The merger has resulted in significant economies of scale, with around 30% of the domestic market share in operational capacity.

Furthermore, ECL benefited from backward integration as a result of the merger. Previously, it had to purchase Pig Iron used in the fabrication of CI Pipes on the open market, but now it sources it domestically.


With Electrosteel Castings leading market position, backward integrated operations, and the recent merger providing significant synergies, Electrosteel Castings appears well-positioned for future growth. However, investors need to evaluate if the company can effectively manage input cost pressures and improve profitability going forward.

What are your views on the future prospects of Electrosteel Castings?

Written by Nalin Suriya 

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