Welspun Corp drops after Q3 PAT skids 70% YoY to Rs 61 cr

Welspun Corp shed 7.62% to Rs 170.85 after the company's consolidated net profit slumped 70.21% to Rs 61.38 crore on a 6.78% decline in revenue from operations to Rs 1,298.89 crore in Q3 FY22 over Q3 FY21.

Consolidated profit before tax (PBT) tumbled 67.23% to Rs 87.89 crore in Q3 FY22 from Rs 268.25 crore in Q3 FY21. Reported EBITDA was at Rs 180 crore. Operating EBITDA margin stood at 13.86% in Q3 FY22 as against 18.10% in Q3 FY21. Net profit margin was at 4.73% in Q3 FY22 over 14.50% in FY21.

The current global order book stood at 543 KMT valued at Rs 4,700 crore (i.e. $634 million). Gross debt stood at Rs 1,264 crore in December 2021 as against Rs 1,230 crore in September 2021 and Rs 816 crore in June 2021. Cash & cash equivalents was at Rs 2,103 crore in December 2021 as compared to Rs 2,252 crore in September 2021 and Rs 1,670 crore in June 2021.

The company has fully utilized its existing tax credits in FY21 and has switched to the new corporate tax rate of 25.17% in FY22 from 34.94% (both including surcharges) in India. During Q2 FY22, the company paid a dividend of Rs 130 crore. The dividend amount declared per share for FY21 was at 100% of fave value of Rs 5 per share.

As per the company's business outlook, "Brent crude touched a seven-year high of $93.27 due to tight global supplies. Several OPEC members have struggled to meet even current monthly targets and lack spare capacity to boost production any further. Only a handful of states, notably Saudi Arabia, have some spare capacity that could possibly increase output. Even gas prices are at unprecedented high levels driven by strong demand. Overall, the current level of elevated prices, which we believe would stay, is a big positive for WCL and is expected to drive global spending for Oil & Gas pipeline related infrastructure projects in the medium term. We are also witnessing marked corrections in Steel Prices and they are now at a more acceptable level across geographies."

Commenting on the Q3 results, B. K. Goenka, the chairman of Welspun Group, said, "1 am delighted by the successful IPO completion of EPIC, our JV company in the Kingdom of Saudi Arabia. The oversubscription numbers reflect EPIC's strong track record in exceeding customer expectations and opportunities for further growth. With the recent budgetary allocation for Oil & Gas, Water and CGD, I am also extremely hopeful of a significant growth in our India Business. Moreover, I am pleased to see that our endeavor to embed ESO into all aspects of our business has been recognized in S&P Global's DJSI Corporate Sustainability Assessment with a 68~ percentile in the peer group. Overall, we have built a strong foundation and are confident of executing on our Business Growth and Diversification plans."

Welspun Corp is a one-stop service provider offering end-to-end pipe solutions.

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