The shares of this midcap company jumped upto 3 percent in Tuesday’s trading session after receiving a supply order worth Rs. 2,400 crores for a natural gas pipeline project. In one year, the stock has delivered more than a 90 percent return to its shareholders.
Price Movement:
With a market capitalization of Rs. 19,843 crores, the shares of Welspun Corp Ltd started Tuesday’s trading session on a flatter note at Rs. 767 compared to its previous close of Rs. 766.30.
During the trading session, the shares hit a high of Rs. 794.75, gaining around 3 percent, also recorded as the company’s fresh 52-week high and are currently trading at Rs. 752 apiece.
What Happened:
Such a positive movement in the share price was observed after the company in an exchange filing announced that it had received an order in the US worth Rs. 2,400 crore for the supply of coated HSAW pipes for a natural gas pipeline project. The execution of this order is scheduled for FY25 and FY26.
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Financials:
Looking at the company’s financial statements, the revenue decreased by 30 percent from Rs. 4,461 crores during the March quarter to Rs. 3,137 crores in the June quarter. On the other hand, the net profits declined by 14 percent from Rs. 287 crores to Rs. 248 crores during the same period.
Order Book:
As of June 30, 2024, Welspun Corp’s confirmed order book amounted to Rs. 8,508 crore, which includes 497 KMT of line pipes valued at approximately Rs. 5,710 crore, 300 KMT of ductile iron (DI) pipes worth around Rs. 2,495 crore, and 6,791 metric tonnes of stainless steel (SS) bars and pipes contributing about Rs. 303 crore to the total.
Management Guidance:
Welspun Corp has set a revenue target of Rs. 17,000 crores for FY25, which represents a 3.3 percent decline from the previous year’s Rs.17,582 crore. Similarly, EBITDA is expected to decrease to Rs. 1,700 crore from Rs. 1,804 crore in FY2434.
Despite the anticipated decline in revenue and EBITDA, net profit is projected to grow by 20 percent, primarily due to lower finance costs and increased other income.
On March 15, 2023, the company acquired Sintex-BAPL, a market leader in water tanks and other plastic products, to expand its building materials portfolio. It has also made a strategic acquisition of specified assets of ABG Shipyard.
Sintex has finalized an investment of up to Rs. 2,355 crore aimed at establishing manufacturing units for plastic pipes and water storage across various Indian states.
Important financial Ratios:
In terms of key financial metrics, the company reported a Return on Equity (RoE) of 19.77 percent and a return on capital employed (RoCE) of 18.49 percent for the period spanning FY23-24. Moreover, during the same timeframe, the net profit margin stood at 5.04 percent.
Company Profile:
Headquartered in Mumbai, Welspun Corp was incorporated in 1995. The company is one of the largest manufacturers of large-diameter pipes globally. The company also manufactures BIS-certified Steel Billets, TMT (Thermo-Mechanically Treated), Rebars, Ductile Iron (DI) Pipes, Stainless Steel Pipes, and Tubes and Bars.
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Written By Vaibhav Patil
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