India: Welspun Corp's sales rise y-o-y in Q3FY'24

Welspun Corp Ltd. has recently announced its consolidated financial results for the quarter ended 31 December, 2023 (Q3FY'24).

Financial highlights-

Sharp sales growth y-o-y: Sales volume of line pipes stood at 0.291 million tonnes (mnt) in Q3FY'24, a growth of 49% y-o-y in comparison with 0.163 mnt in Q3FY'23. Moreover, sales of pipes rose by 44% q-o-q in Q3 against 0.202 mnt in the previous quarter.

Revenue rises y-o-y: Total revenue from operations was at INR 4,750 crore for Q3, an increase of 98% y-o-y against INR 2,402 crore in the same quarter of the previous fiscal. Moreover, on a q-o-q basis, the same registered a growth of 17% in Q3 against INR 4,060 crore in the previous quarter.

EBITDA surges y-o-y: Earnings before interest, taxes, depreciation, and amortization (EBITDA) stood at INR 471 crore in Q3, an increase of 171% y-o-y against INR 174 crore in Q3FY'23. However, the same declined by 6% q-o-q from INR 502 crore in the previous quarter.

PAT increases y-o-y: Profit after tax (PAT) stood at INR 292 crore in Q3FY'24, up 1156% y-o-y compared to INR 23 crore in Q3FY'23. However,, the same declined by 14% q-o-q from INR 341 crore in the Q2FY'24.

Global order book position: Welspun's current global order book for line pipes stands at 0.575 mnt valued at approximately INR 7,200 crore.

Moreover, Welspun Corp's associate company, East Pipes Integrated Company for Industry (EPIC), has signed a contract with Saudi Aramco worth SAR 1.32 billion (INR 3,000 crores).

• Steel pipe order of SAR 1 billion received from SWCC.
  
  
• Saudi Arabian Oil Co. got steel pipes orders for manufacturing worth SAR 153 million.
  
  
• Indian firm bags SAR 170 million and Aramco order for pipe treatment.
  
  

In addition, EPIC, has a confirmed order backlog that surpasses two years.

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 10% y-o-y.

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 35% q-o-q from 46,000 t in Q2FY'24 to 62,000 t in Q3FY'24.

The company has a strong order backlog for DI pipes of approximately 0.264 mnt, which is valued at approximately INR 2,185 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 FY'24.