Welspun Corp LtdQ1 FY24Industrial Products

Welspun Corp Ltd

Q1 FY24 Earnings Call Analysis

Management growth scorecard

Revenue

Category 2

Margin

Category 3

Fundraise

Order

Yes

Capex

Yes

2 of 5 growth signals are positive.

Revenue guidance

Category 2

→Welspun Corp expects significant growth across all businesses: stainless steel, Sintex (building materials), TMT bars, DI pipes, and U.S. operations.
→Sintex business sales grew 35% YoY to INR 635 crore in FY24, with a targeted 3x to 4x top-line growth over the next 5 years.
→DI pipe capacity expanding from 400,000 to 600,000 tonnes with expected 70-80% utilization in FY25; order book covers 9 months.
→TMT bar sales reached 120,000 tonnes in FY24 (~50% capacity utilization); aiming for 70-80% utilization in FY25 and '26.
→Overall revenue grew from INR 10,000 crore to INR 17,000 crore in FY24; expected steady to strong growth going forward.
→Management confident in multi-year growth supported by government schemes (Jal Jeevan Mission, AMRUT), infrastructure and industrialization projects.
→Capacity utilization targets include 70-80% for Sintex and significant utilization ramp in pipe and steel segments.

Category 3

→Welspun Corp recorded record FY'24 financials: revenue INR17,500 crore (+74% YoY), EBITDA INR1,800 crore (2x prior year), and PAT INR1,110 crore (>5x increase). ROCE improved to 20% from 8% in FY'23.
→Management confident of sustained growth in key segments: stainless steel, Sintex (water tanks and pipes), TMT bars, line pipes, and DI pipes.
→Sintex business is EBITDA positive since FY'24 and expected to contribute more as capex (~INR2,300 crore over 2 years) drives new growth starting H1 FY'26.
→Capacity expansions underway (DI pipes capacity to rise from 400,000 to 600,000 tonnes).
→TMT business aiming for 70-80% capacity utilization in FY'25-26 with further demand expected from Gujarat's industrialization.
→EBITDA margins have room to improve, on a medium-term basis.
→Debt management focused on keeping debt/EBITDA ratio below 5x; net debt reduced significantly in FY'24.
→Guidance for FY'25 is cautious but expected to be revised upward as year progresses, based on market fundamentals.

Get access to all 5 sections — revenue, margin, fundraise, orderbook, and capex — for Welspun Corp Ltd and 1,400+ other companies.

→No explicit mention of any new fundraising through equity in the document.
→Capex of INR 2,350 crore planned over next 2 years, primarily funded through internal cash flows from profitable businesses.
→Strong focus on managing debt levels; internal target to keep debt-to-EBITDA below 5x, preferably lower.
→Net debt reduced significantly from INR 1,138 crore in FY '23 to INR 387 crore in FY '24, showing prudent debt management.
→The company expects all businesses to generate sufficient free cash flow to fund growth and capex without stressing the balance sheet.
→No indication of planned raising of debt beyond existing management limits.
→Priority remains on operational growth and internal accruals to fund capital expenditure and expansion.

Yes

→U.S. order book volume pending execution is approximately 80,000 to 100,000 tonnes, expected to last till Q3 FY25 (Page 14).
→DI pipe business has an order book of over 325,000 tonnes, giving visibility for about 9 months in FY25 (Page 5).
→Total DI pipe order book is 328,000 tonnes with capacity expanding from 400,000 to 600,000 tonnes (Page 9).
→Saudi entity (EPIC) has a confirmed order book covering more than 2 years, ensuring sustainable performance over next 8 quarters (Page 5).
→U.S. order book confirmed till Q3 of FY25 with active pursuit of additional pipelines (Page 4).
→Overall, order books provide visibility ranging from 9 months to over 2 years depending on region and product.

Yes

→**Sintex Business:**
→ - INR 2,300 - 2,350 crore capex planned over the next 2 years, focusing on pipes business (CPVC, UPVC, HDPE, OPVC).
→ - Capex spread mainly in FY '25 and FY '26.
→ - Operations expected to start from Q1 or H1 FY '26.
→**DI Pipes Business:**
→ - Capacity expanded from 400,000 tonnes to 500,000 tonnes, further expanding to 600,000 tonnes by FY end.
→ - Capex for DIP expansion in India mostly within this financial year.
→ - Additional capex of around INR 500 crore planned for DIP expansion in the Middle East over 2 years.
→**Steel (TMT) Business:**
→ - Plans to optimize existing capacity with approximately 70-80% utilization target; no immediate capex mentioned.
→**Other Notes:**
→ - Total capex for FY could be between INR 1,500 to 2,000 crore considering all projects.
→ - Strong focus on profitable growth, capacity utilization, and maintaining healthy debt levels.

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