Welspun Corp posted a 9 per cent decline in its consolidated net profit to Rs 240.08 crore for the January-March quarter, hit by higher expenses.
Shares of Welspun Corp have been on the radar of Dalal Street investors since the announcement of its Q4 results and the stock has gained about 9 per cent since then. On the other hand, brokerage firms see more steam left in the counter, while a few analysts see it as another multibagger in the making. Welspun Corp posted a 9 per cent decline in its consolidated net profit to Rs 240.08 crore for the January-March quarter, hit by higher expenses, compared to a net profit of Rs 263.56 crore in the same quarter last year. The company's total income rose to Rs 4,132.38 crore from Rs 2,413.48 crore in the year-ago quarter. The company clocked an EBITDA for the quarter at Rs 483 crore and for FY23 at Rs 805 crore. The result also mentioned the company’s acquisition of the Plastic Products business of Sintex BAPL & Specified Assets of ABG Shipyard.
Shares of Welspun Corp jumped more than 3 per cent on Friday, before giving up its gain partially. The company is commanding a market capitalization of more than Rs 6,825 crore. The scrip had settled at Rs 260.15 on Thursday. The stock has gained about 400 per cent from its Covid-19 lows. The company guided for a 50 per cent growth in its revenue over FY24 to approximately Rs 15,000 crore. Welspun also targets increasing natural gas consumption from 6 per cent to 15 per cent of the energy mix by 2030. It also expects refining capacity to increase from 250 MTPA to 450 MTPA over the next few years. Consolidated revenues were 29 per cent higher than expectations at Rs 4,070 crore driven by higher-than-expected India sales and Pig iron volumes. Total pipe sales volumes were higher than expected, boosted by strong execution from India, while the US was in-line but Saudi sold higher than expected volumes, said Phillip Capital in its report. "Consolidated EBITDA exceeded estimates driven by very high margin order execution from Indian mills. Subsidiary EBITDA losses came down. Standalone EBITDA/t were at Rs 16,958 partially aided by good billet sales. PAT was also a beat against our estimates," it added. Local presence in the US, Saudi and India is the biggest advantage for the company considering the global outlook of line pipe construction is increasing and many countries still have an entry barrier on imported pipe. A further ramp-up in DI pipe and US business will propel the EBITDA to meaningful levels. This would also drive the cash flow, Phillip Capital said with a 'buy' rating and a target price of Rs 330. Welspun Corp, the flagship company of the Welspun Group, is one of the largest manufacturers of large-diameter pipes globally with a presence in 50 countries. The company has also made significant operational progress in new businesses of manufacturing DI pipes and TMT rebars. Welspun Corp results beat on all fronts on estimates. This was on the back of a strong performance of India business, with a good mix of exports, and US business performing decently. Sintex BAPL and Nauyaan Shipyard (ABG) both are in control of the company. Welspun is currently evaluating its strategies with Nauyaan and possible opportunities, said Arihant Capital Markets. The company has posted a strong set of results and the commentary has been equally good. The guidance has been increased from Rs 15,000 crore of revenues in 3-5 years to Rs 15,000 crore revenues in FY24 itself with 10 per cent EBITDA margins, it said. Arihant Capital believes the company is at an inflection point as the entire capex is completed and all the segments are lucrative now. The prospects are favourable now and we believe the company can perform tremendously from here on. The increased guidance provides a lot of comforts and we believe the next plan of action will be to reduce the debt, it added maintaining a 'buy' tag with a target price of Rs 549 on the stock, suggesting an upside of 117 per cent from its previous close at Rs 260.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Business Today)