Axis Securities picks Welspun Corp as its high conviction stock; here's why

Axis Securities has picked Welspun Corp as its high conviction stock under ‘Axis Punch’. The brokerage has recommended ’Buy’ on the stock with a target of ₹875, citing a record order book, strong visibility in US and India businesses, disciplined capital allocation and robust return ratios. On the valuation front, the stock is valued attractively at current levels, according to analysts.

Record order book drives multi-year revenue visibility

Welspun Corp’s consolidated order book has climbed to an all-time high of about ₹23,500 crore as of October 2025, providing clear revenue visibility for the next two years in the US and at least one year for ex-US operations, according to Axis Securities. The line pipe order book of roughly 1.3 million tonnes is evenly split between India and the US at around 600 kt each, while the Ductile Iron (DI) pipe order book stands at about 355 kt.

 

 

In the US, the order book includes recent wins worth around $715 million, which secure mill bookings through FY28. In India, the backlog is supported by healthy export demand and a pipeline of upcoming water infrastructure projects.

Strategic edge in US and Saudi markets

The brokerage notes that Welspun Corp US operations are benefiting from a structural demand shift, driven by liquefied natural gas (LNG) export projects and rising power requirements for data centres. This has kept the Little Rock mill fully booked until FY28. To capture this momentum, the company is expanding its longitudinal submerged arc welded (LSAW) and high-frequency induction welded (HFIW) capacities in the US.

 

In Saudi Arabia, Welspun Corp is leveraging the Vision 2030 infrastructure build-out via its associate EPIC and by setting up wholly owned greenfield LSAW and DI pipe facilities. These assets are aimed at catering to Saudi Aramco’s sizeable annual capex of about $10 billion and large-scale water infrastructure investments, according to analysts.

Capex funded by internal accruals, strong cash generation

Welspun Corp has lined up a sizable capex programme of around ₹5,500 crore over FY25–27. Of this, approximately ₹1,800 crore has already been incurred in FY25 and H1 FY26. The remaining spend, planned through FY28, is expected to be funded largely via internal accruals.

 

Despite this investment phase, Welspun Corp has maintained a net cash position of ₹11 crore as of H1 FY26, even after undertaking ₹950 crore of capex during the period. This compares with a net cash position of ₹1,049 crore as of March 2025 and underscores the company’s strong free cash flow generation and financial discipline, noted Axis Securities.

Earnings guidance and return ratios remain strong

Management remains confident of achieving its FY26 Earnings before interest, tax, depreciation and amortisation (Ebitda) guidance of ₹2,200 crore, having already delivered ₹1,186 crore in the first half of FY26. Profitability metrics are robust, with an annualised return on capital employed (ROCE) of about 24 per cent in H1 FY26. The company has articulated a strategic goal of consistently maintaining ROCE above 20 per cent, even as it executes its expansion plans in the US and Saudi Arabia.

 

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