India: Welspun Corp's sales rise by 36% y-o-y in Q2FY24

Welspun Corp Ltd. has recently announced its consolidated financial results for the quarter ended 30 September, 2023 (Q2FY'24).

Financial highlights-

• Sharp sales growth y-o-y: Sales volume of line pipes stood at 0.202 million tonnes (mnt) in Q2FY'24, a growth of 36% y-o-y in comparison with 0.148 mnt in Q2FY'23. Moreover, sales of pipes rose by 46% q-o-q in Q1 against 0.185 mnt in the previous quarter.
  
  
• Revenue rises y-o-y: Total revenue from operations was at INR 4,060 crore for Q2, an increase of 107% y-o-y against INR 1,964 crore in the same quarter of the previous fiscal. However, on a q-o-q basis, the same remained marginally stable against INR 4,069 crore in the previous quarter.
  
  
• EBITDA surges y-o-y: Earnings before interest, taxes, depreciation, and amortization (EBITDA) stood at INR 502 crore in Q2, an increase of 991% y-o-y against INR 46 crore in Q2FY'23. Moreover, the same increased by 20% q-o-q from INR 418 crore in the previous quarter.
  
  
• PAT increases y-o-y: Profit after tax (PAT) stood at INR 341 crore in Q2FY'24, up 374% y-o-y compared to INR 72 crore in Q2FY'23. In addition, the same rose by 42% q-o-q from INR 240 crore in the Q1FY'24.
  
  

Global order book position: Welspun's current global order book for line pipes stands at 0.611 mnt valued at approximately INR 8,000 crore.

The company has won the contract of approximately 61,000 t for the export of LSAW pipes and bends to the Middle East, which will be executed from the facilities in Anjar in FY'24.

In addition, their partner company in Saudi Arabia, EPIC, has a confirmed order backlog that surpasses two years. They have started execution of recent Aramco order of large diameter steel pipes, which is valued at SAR 1.8 billion (approx. INR 4,000 crore)

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 sales volume in this segment went up 16% y-o-y.

In addition, Sintex has taken a step ahead to foray into PVC Pipes segment in the state of Telangana and is planning to set up a manufacturing unit in the state with investment of up to INR 350 crore.

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 70% q-o-q from 27,000 t in Q1FY'24 to 46,000 t in Q2FY'24.

The company has a strong order backlog for DI pipes of approximately 0.246 mnt, which is valued at approximately INR 1,960 crore. Moreover, export opportunities are being explored in key markets of the Middle East and Africa for the same segment.

3. Nauyaan Shipyard (erstwhile ABG Shipyard): The company has bought the specific assets of ABG Shipyard and is now focused on selling them to make money. They are not considering any expensive investment options, such as shipbuilding. Additionally, they have been selling off metals and metal scrap, which will provide a steady stream of cash.

Outlook: The company is targeting INR 1,500 crore in EBITDA and ROCE of 16% or higher by the end of fiscal year 2024. To achieve these goals, the company will focus on growing its Sintex, DI pipes, and WSSL businesses. Additionally, the company plans to complete its current order book for line pipes by the end of the year.