India: Welspun Corp reports strong sales volume growth in FY'24

Welspun Corp Ltd. has recently announced its consolidated financial results for the fiscal year ended on March 2024 (FY'24).

Financial highlights:

Sharp sales growth y-o-y: Sales volume of line pipes stood at 0.98 million tonnes (mnt) in FY'24, a growth of 49% y-o-y in comparison with 0.659 mnt in FY'23. Moreover, sales of pipes rose by 21% y-o-y in Q4FY'24 to 0.302 mnt against 0.249 mnt in Q4FY'23.

Revenue rises y-o-y: Total revenue from operations was at INR 17,582 crore for FY'24, an increase of 74% y-o-y against INR 2,4 crore in the previous fiscal year. Moreover, for the fourth quarter, the same registered a growth of 10% to INR 4,544 crore as against INR 4,132 crore in Q4FY'23.

EBITDA surges y-o-y: Earnings before interest, taxes, depreciation, and amortisation (EBITDA) stood at INR 1,804 crore in FY'24, an increase of 124% y-o-y against INR 805 crore in FY'23. However, the same declined by 14% y-o-y in Q4FY'24 from INR 502 crore in Q4FY'23.

PAT increases y-o-y: Profit after tax (PAT) stood at INR 1,110 crore in FY'24, up 436% y-o-y compared to INR 207 crore in FY'23. Moreover, the same went up by 14% y-o-y to INR 268 crore in the fourth quarter from INR 236 crore in the Q4FY'23.

Order book position: Welspun's current global order book for line pipes stands at 0.528 mnt valued at approximately INR 6,200 crore.

Beyond the strong current orders, the company anticipates significant growth opportunities domestically and abroad in its key sectors like oil and gas, water, infrastructure, defence, power, and plastics.

Business update:

1. Sintex: The company has completed the acquisition of the plastic products business of Sintex-BAPL and specified assets of ABG Shipyard. Their revenue growth in this segment went up 23% y-o-y to around INR 635 crore.

Sintex has a pan India presence through its widespread distribution network of 900+ distributors and 13,000+ retailers.

In addition, Sintex has finalised its plan to foray into plastic pipes segment through its step down subsidiary Sintex Advance Plastics Limited (SAPL).

2. DI pipes: There has been a consistent improvement in the company's DI pipes production and sales. Total sales of DI pipes grew by 441% y-o-y from 37,000 tonnes (t) in FY'23 to 200,000 t in FY'24.

The company has a strong order backlog for DI pipes of approximately 0.328 mnt, which is valued at approximately INR 2,741 crore. Moreover, export opportunities are being explored in key markets of the Middle East and Africa for the same segment.

The company is expanding its Anjar facility from 500,000 to 600,000 mtpa (metric tonnes per annum) without raising additional capital expenditures. The project is on schedule, and a new 150,000 mtpa facility is also moving forward in the Middle East.

3. Nauyaan Shipyard (erstwhile ABG Shipyard): The company has bought the specific assets of ABG Shipyard and is currently monetising the acquired assets through strategic sales. This approach prioritises generating cash flow rather than pursuing capital-intensive ventures like shipbuilding. Additionally, the company is capitalising on the sale of metals and scrap metal for further financial stability.

Outlook:

Welspun Corp's impressive FY'24 performance coupled with strategic acquisitions and expansion plans position the company for continued growth across its core business segments like oil & gas, water, infrastructure, and more.

The company's focus on operational efficiency and cost control is expected to drive long-term profitability.