Buy Welspun Corp, target price Rs 940: JM Financial

JM Financial has a buy call on Welspun Corp with a target price of Rs 940. The current market price of Welspun Corp is Rs 774.05. Welspun Corp, incorporated in 1995, is a Mid Cap company, with a market cap of Rs 20591.80 crore) operating in the Metals - Ferrous sector.

Welspun's key products/revenue segments include Welded Pipes, Scrap, Other Operating Revenue and Export Incentives for the year ending 31-Mar-2024.

Financials

For the quarter ended 31-12-2024, the company has reported a Consolidated Total Income of Rs 3656.57 crore, up 8.69% from last quarter Total Income of Rs 3364.23 crore and down -23.15% from last year same quarter Total Income of Rs 4758.17 crore. The company has reported net profit after tax of Rs 228.13 crore in the latest quarter.

The company?s top management includes Mr.Balkrishan Goenka, Mr.Vipul Mathur, Mr.Rajesh R Mandawewala, Mr.Aneesh Misra, Ms.Amita Misra, Mr.Manish Chokhani, Mr.Anjani Agrawal, Ms.Dipali Sheth. Company has Price Waterhouse Chartered Accountants LLP as its auditors. As on 31-12-2024, the company has a total of 26 Crore shares outstanding.


Investment Rationale
Welspun Corp reported 3Q EBITDA at Rs 4.3 billion, in line with JM Financial estimates. EBITDA was up 9% QoQ given higher line pipe volumes (+14% QoQ). Key takeaways from the call are ? a) FY25 guidance maintained ?EBITDA : Rs 17 billion; RoCE : 20% b) Order book for Line pipes / DI pipes / SS Bars stands at Rs 122 billion / Rs 27 billion / Rs 1.9 billion respectively (ex Saudi Arabia) c) EPIC (Saudi Arabia) has a confirmed order book for more than 2.5 years d) US ? demand outlook robust; confirmed order book for the next 6-7 quarters e) Sintex - plastic pipe volumes to come in from 1QFY26 f) Company plans to introduce OPVC pipes in 1QFY26; expects significant demand potential from this segment g) all the projects including KSA and US remain on track. Net debt during the quarter sharply reduced to Rs 1 billion vs Rs 5.3 billion in 2Q given better operational cashflows and inflow from sale of 5% stake in EPIC. Company has guided to maintain its Net Debt to EBITDA ratio below 0.5x. Improved scale across businesses buoyed by macros will help capitalize on operating leverage, while strong cash flows will further reduce financial leverage.

Promoter/FII Holdings
Promoters held 50.01 per cent stake in the company as of 31-Dec-2024, while FIIs owned 11.71 per cent, DIIs 14.1 per cent.