Welspun Corp Ltd Q1 FY26 Earnings Analysis

- Revenue guidance for FY2026 is approximately Rs. 17,500 crores, reflecting a 25% growth over FY25 actuals. - EBITDA guidance for FY2026 is around Rs. 2,200 crores, an 18% increase over FY25. - Line pipe sales volume for India and US reached about 850,000 tons in the recent year with strong order books: Rs. 19,550 crores providing visibility for over 2 years for US business and 1 year for India operations. - Ongoing and planned capacity expansions for O-PVC pipes with six new lines expected, aiming for dominance in this segment. - US market orders expected to sustain demand with potential growth due to import restrictions and LNG export expansion. - Saudi Arabia market presents further growth with pipeline demand in water and Oil & Gas sectors. - Continued strong outlook for DI pipes in India driven by Jal Jeevan Mission with expected 5-7 years of stable demand. - Sustained focus on premiumization with Sintex contributing positively to growth.

- Welspun Corp projects robust growth in FY26 with revenue guidance of Rs. 17,500 crores, a 25% increase over FY25. - EBITDA guidance is Rs. 2,200 crores, up 18% from FY25, reflecting a focus on profitability rather than just top-line growth. - Historical track record shows consistent achievement or surpassing of guidance with a 15% CAGR in EBITDA over prior years. - The company maintains a strong ROCE target of over 20%, consistent for the past 3 years, emphasizing efficient capital use. - Net debt to EBITDA ratio is targeted to remain below 1, ensuring financial stability despite ongoing CAPEX. - Significant CAPEX of Rs. 1,300 crores planned over next 2 years focusing largely on O-PVC capacity expansion, expected to drive future earnings. - US and Saudi markets offer strong demand outlooks with long-term order books providing visibility for next 2 to 5 years. - O-PVC business aims for mid-teen EBITDA margins and is poised for growth with planned capacity expansions.

- Comprehensive CAPEX of Rs. 1,300 crores planned over next 2 years focused largely on O-PVC pipes; Rs. 300 crores spent in FY25, Rs. 1,000 crores to be spent in FY26 and FY27. - Six O-PVC production lines planned: 2 already operational at Bhopal, 2 more by end of FY25, and 2 by start of FY26; additional expansions in Raipur and South India. - New coating facility to be set up at Bhopal to enhance pipe coating capabilities. - Greenfield LSAW pipeline project in the USA approved, targeting US market with capex exceeding Rs. 1,000 crores. - Total announced CAPEX of Rs. 5,500 crores over next 2 years, staggered and mostly back-end loaded. - Capacity expansion for high-grade value-added steel and stainless steel pipes ongoing. - Investment in Sintex water storage tanks and plastic pipe business to support premiumization and channel expansion. - Dropped DRI capacity expansion to focus on high-priority value-added segments.

- Welspun Corp is not planning to increase its debt despite ongoing CAPEX; it aims to remain a net debt positive company. - The company currently has a strong cash position of around Rs. 1,000+ crores. - CAPEX of Rs. 1,300 crores is planned over the next 2 years (FY26 and FY27), largely focused on O-PVC pipe capacity additions and facility upgrades, but this will be done in a calibrated manner without raising new debt. - Net debt to EBITDA ratio is targeted to be maintained below 1, ensuring financial prudence during expansion. - No mention of any new equity fundraising in the discussed period. - Overall, Welspun plans to fund expansions and operations through internal accruals and existing cash balances, avoiding additional borrowing or equity dilution.

- Consolidated order book stands at approximately Rs. 19,550 crores. - This order book provides clear visibility of: - More than 2 years of business operations in the US market. - Almost 1 year of order visibility for India LSAW pipe, DI pipes, and SS pipe operations. - DI pipes have a confirmed order book of over 350,000 tons, equivalent to about 1 year's orders. - US orders consist of confirmed orders with fully hedged steel inventory, ensuring margin stability. - The strong US order book and demand visibility extend for the next 3 to 5 years beyond the current 2 years of confirmed orders.