30-Oct-2026 18:47:52
WELSPUN CORP Q2 CONCALL: RETAINS ₹2,850 CR FY27 EBITDA GUIDANCE & OVER 20% ROCE TARGET; RECORD ₹50,000 CR ORDER BOOK, US CAPACITY EXPANSION OF 2.25 LAKH TPA & $125 MILLION JORDAN JV PROJECT
• FY27 EBITDA Guidance: Management reiterated its annual EBITDA guidance of ₹2,850 Cr, supported by a strong order book and execution visibility across international operations. • FY27 ROCE Guidance: Management maintained its target of over 20% return on capital employed, compared with annualized ROCE of 22.7% achieved during H1 FY27. • H2 FY27 Outlook: Management expects strong business momentum during H2 and remains confident of achieving its full-year guidance, with potential upside depending on geopolitical and execution conditions. • FY28 Earnings Outlook: Management expects incremental revenue and profitability from new US and Saudi manufacturing capacities during the next financial year. • Order Book: Company's order book reached an all-time high of approximately ₹50,000 Cr, equivalent to around $5.2 billion, providing multi-year revenue visibility. • US Order Book Visibility: Management confirmed that its US manufacturing operations are fully booked through FY29. • US Demand Outlook: Management expects pipeline demand to remain strong for another 3–5 years beyond FY29, supported by LNG exports, data centers and oil and gas infrastructure. • Long-Term Pipeline Demand: Management believes the current demand cycle represents a structural industry expansion, with visibility extending approximately 5–7 years. • US Order Booking Outlook: Management indicated that the pace of new project awards may moderate as customers align execution schedules with available manufacturing capacity. • Data Center Pipeline Opportunity: Management expects demand for natural gas pipelines supplying captive power plants at AI data centers to become a major long-term growth driver. • Data Center Demand Outlook: Management indicated that pipeline demand associated with data centers could exceed LNG export-related demand over the next 5–7 years. • US Data Center Orders: Management confirmed that a recently secured large US pipeline order was linked to a data center power infrastructure project. • US Capacity Expansion: Board approved debottlenecking and expansion of spiral pipe manufacturing capacity by 2,25,000 tonnes per annum. • US Expansion Capex: Company plans to invest up to $115 million in the capacity augmentation project. • US Expansion Timeline: Additional spiral pipe capacity is expected to become operational by March 2028. • US Margin Outlook: Management confirmed that profitability terms on major existing US orders are locked in through their execution period extending to FY29. • US Order Strategy: Management intends to pursue additional profitable orders through capacity expansion rather than replacing or swapping existing contracted orders. • US Competitive Position: Management highlighted its approximately 800-acre Little Rock manufacturing complex, established logistics network, storage facilities and rail connectivity as competitive advantages. • US Market Share Outlook: Management expects its position to strengthen as new capacity becomes available, while competitors are undertaking relatively smaller expansions. • Saudi Capacity Commissioning: Management confirmed that the new LSAW and ductile iron pipe manufacturing facilities remain on schedule for commissioning during Q3 FY27. • Saudi Commercial Operations: Management expects plants to be ready by the end of calendar year 2026, although business ramp-up may depend on normalization of regional supply chains. • Saudi Utilization Guidance: Management indicated that achieving at least 50–60% capacity utilization during the first year of operations is a reasonable aspiration, subject to supply-chain recovery. • Saudi Business Outlook: Management expects strong demand from oil and gas pipelines, water infrastructure, desalination projects and energy security investments. • Saudi Revenue Ramp-Up: Management expects faster utilization growth once raw material availability and finished-product transportation stabilize. • Saudi Expansion Risks: Prolonged geopolitical and logistics disruptions could delay the realization of incremental earnings from Saudi operations. • Saudi Ductile Iron Pipe Opportunity: Management highlighted import substitution opportunities, noting that a significant portion of Saudi domestic demand has historically been met through imports. • Saudi Export Potential: Management indicated that Saudi manufacturing capacity could technically serve North American customers, although local demand will remain the priority. • Jordan Greenfield Project: Board approved setting up a spiral pipe manufacturing and coating facility in Jordan through a 50:50 joint venture with Perma-Pipe. • Jordan Project Investment: Total project capex is estimated at up to $125 million, to be shared between the joint venture partners. • Jordan Capacity Outlook: Management indicated that the proposed facility could have capacity of approximately 3.5–5 lakh tonnes annually, with final specifications under evaluation. • Jordan Project Demand: Investment is backed by a firm memorandum of understanding related to Jordan's National Water Carrier Project and discussions with project stakeholders. • Jordan Growth Opportunity: Management expects the facility to serve water, oil and gas, and infrastructure requirements in Jordan and surrounding Middle Eastern markets. • Middle East Reconstruction Opportunity: Management sees long-term opportunities from potential reconstruction activity in Syria, Iraq, Lebanon and other regional markets. • India Coating JV: Company plans to establish an internal fusion bonded epoxy coating facility in India through an equal joint venture with Perma-Pipe. • India JV Capex: The proposed internal FBE coating project at Anjar involves total investment of approximately ₹110 Cr, funded by the two partners. • India Coating Commissioning: Management expects the facility to become operational during FY28. • Export Opportunity From Coating JV: The new capability will allow Welspun to compete for large export pipe orders requiring internal FBE coating, alongside its existing coating services. • India Domestic Demand Outlook: Management expects domestic pipeline demand to remain subdued over the next few quarters, particularly in the water infrastructure segment. • India Water Pipeline Business: Project awards remain affected by budgetary constraints and slower spending under government water infrastructure programmes. • India Oil & Gas Opportunity: Management sees early signs of recovery in city gas distribution, deepwater exploration and refinery-related projects, although major orders are yet to materialize. • India Export Outlook: Management expects export demand to remain strong, supported by opportunities in the Middle East, Southeast Asia, Latin America and Australia. • India DI Pipe Strategy: Company is increasing focus on ductile iron pipe exports to Europe and the Middle East to offset weaker domestic water infrastructure demand. • Domestic DI Volume Outlook: Management expects domestic DI pipe volumes to remain substantially lower during FY27, reflecting continued demand weakness. • Global Tender Pipeline: Management indicated that approximately 2–3 million tonnes of pipeline opportunities are typically under active consideration, although the pipeline changes frequently. • Hydrogen Pipeline Opportunity: Management sees long-term potential in hydrogen transportation infrastructure, but indicated that project activity has slowed as countries prioritize immediate energy security. • Welspun Specialty Solutions Outlook: Management expects stronger demand from domestic power generation, thermal, nuclear, defense, aerospace and petrochemical applications. • Specialty Steel Growth Drivers: Management sees power generation as the primary growth opportunity for WSSL, followed by nuclear power-related requirements. • Specialty Steel Demand Visibility: Management expects domestic power generation investments to create a structural demand opportunity lasting approximately 8–10 years. • Specialty Steel H2 Outlook: Management expects better business activity during the next two quarters compared with Q2, supported by improving domestic demand. • Specialty Steel Export Challenges: Higher freight costs and trade restrictions have affected shipments to European markets, increasing the importance of domestic customers. • Sintex Water Storage Strategy: Management continues to focus on premium products while expanding its economy portfolio to capture growth in Tier 2 and other developing urban markets. • Sintex Plastic Pipes Expansion: Company's plastic pipes business has expanded its distribution footprint to 15 states. • Sintex Profitability Outlook: Management indicated that the business is approaching operating breakeven before discretionary marketing, R&D and technology investments, but did not provide a firm breakeven timeline. • Sintex Growth Strategy: Management expects premiumization, economy-segment volume growth, channel expansion and product innovation to support future profitability. • Sintex Investment Strategy: Company intends to continue spending on marketing, R&D and technology rather than prioritize immediate reported breakeven at the expense of long-term expansion. • Capital Allocation Strategy: Management reiterated its commitment to disciplined capital allocation, prioritizing business growth investments and shareholder returns. • Shareholder Returns: Management indicated that surplus cash could be deployed toward shareholder distributions, although no specific payout amount or allocation has been announced. • Net Cash Outlook: Management expects to retain a consolidated net cash position even after completing currently planned investments in the US, Saudi Arabia, Jordan and India. • H1 Capex: Company incurred capital expenditure of approximately ₹1,500 Cr during H1 FY27. • Net Cash Position: Consolidated net cash increased to approximately ₹3,887 Cr as of September 2026. • Q2 EBITDA Performance: EBITDA reached an all-time quarterly high of ₹782 Cr, increasing approximately 25% YoY. • H1 EBITDA Performance: EBITDA increased approximately 30% YoY to a record ₹1,538 Cr. • H1 ROCE Performance: Annualized return on capital employed stood at approximately 22.7%, exceeding the company's FY27 target of over 20%. • Key Challenges: Geopolitical disruptions in the Middle East, delays in Saudi commercial ramp-up, weak Indian water infrastructure demand, elevated logistics costs, execution of multiple international expansion projects and increasing regional competition remain important factors.
WELSPUN CORP LIMITED