Welspun Corp Ltd

Welspun Corp makes large-diameter steel line pipe, the pipe that carries oil, gas and water over long distances. It is one of the two largest makers of this pipe in the world, and it makes it inside the United States as well as in India. American pipeline projects buy local under Buy America rules, so a domestic mill sells at a premium an importer cannot reach. Consolidated line pipe capacity is about 2.2 million tonnes, split India 1.26, US 0.53, and Saudi Arabia 0.40 through its associate.

Around the core sit smaller businesses: ductile iron pipe for water networks in India and now Saudi Arabia, stainless steel bars and tubes through WSSL, TMT rebar, and Sintex water tanks and plastic pipe. The profit engine is line pipe. For most of its life this was an India-first commodity business, thin margins, orders that had to be won again every year, earnings that swung with the steel and oil cycle. That is the business the market is used to. It is not the business it is turning into.

The US has become the largest share of the order book, roughly two-thirds of it, and US line pipe earns far more than Indian pipe. As American work moves from the book into revenue, the blended margin rises with it. This is already visible. Group EBITDA margin ran between 12.5 and 15.8 percent through FY26 and has stepped to 18.5 percent as US execution has risen.

The company runs on net cash of Rs 2,336 crore even after Rs 834 crore of capex in a single quarter, ROCE is near 23 percent, and it has gone from net debt in FY24 to a growing cash pile while building new plants. A commodity cyclical raising money and thinning returns to grow looks nothing like this.

So the inflection is simple to state. A low-margin Indian pipe maker is becoming a higher-margin business anchored in the US, and it is getting there without stretching its balance sheet. What follows are the things that drive that shift and decide how far it goes.

Why the US pays more, and why it lasts. American gas is cheap and American oil is cheap to produce, so both want to be exported, and export needs pipe. On top of that sits a new leg: gas-fired power plants being built to feed AI data centres, which need gas pipelines to reach them. The order is placed by midstream companies moving gas from the Permian to where the data centres are being built, not by the data centres themselves, which is why it is a multi-year infrastructure stream rather than a one-off. Welspun holds 33 to 35 percent of the US large-diameter market and serves the top midstream buyers. This is what keeps the higher-margin US book full, and it is booked into FY28.

New capacity comes online through FY27 and lands fully in FY28. Four plants commission this year: in the US, a 350 KTPA HFIW line and a 300 KTPA LSAW mill at Little Rock; in Saudi Arabia, a 350 KTPA line pipe mill and a 250 KTPA ductile iron plant at Dammam, feeding Aramco spend and Vision 2030 water work. Plants that switch on during FY27 show a full year of earnings only in FY28. So FY27 is the build year and FY28 is the year the larger earnings base actually shows up.

Saudi is becoming a second engine. EPIC, the Saudi associate, grew its revenue, EBITDA and profit at double digits. The company sold 4.5 percent of it for a gain of about Rs 548 crore and still owns roughly 22 percent, while adding its own greenfield Saudi capacity. A single US-anchored margin story is becoming a two-region one.

The concentration that drives the margin is also the exposure. Two-thirds of the book sits in one country under one set of rules. Buy America is the moat and it is also the one thing that, if it changed, would take the premium away at once. The number to watch is the pace of new order inflow, not the size of the backlog, because the backlog shrinks as the plants execute against it.

Saudi execution is the second. Four plants across two continents in one year is a heavy ramp. The gate is customer approval, not the commissioning certificate. If approvals slip two quarters, the Saudi contribution slides out of FY28, and FY28 is the year the case is built on.

India is soft and likely stays soft. Water spend through Jal Jeevan Mission and Amrut 2.0 is short of funds and is expected to stay slow for a longer stretch. That caps domestic ductile iron volume and price. Stainless steel volume fell year on year, from 8.3 to 6.3 KMT, on tariffs and weak export sentiment, though it is a small part of the whole.

At Rs 1,597 the market cap is about Rs 42,125 crore against net cash of Rs 2,336 crore, so enterprise value is about Rs 39,800 crore.

The company guides two numbers : FY27 revenue of Rs 20,000 crore and EBITDA of Rs 2,850 crore, both about 20 percent growth on FY26. It has beaten its own EBITDA guidance three years running: FY26 came in at Rs 2,371 crore against Rs 2,200 crore guided, FY25 at Rs 1,858 crore against Rs 1,700 crore, FY24 at Rs 1,804 crore against Rs 1,500 crore. After one quarter of FY27 it is running ahead again: Q1 EBITDA of Rs 756 crore annualises to about Rs 3,024 crore against the Rs 2,850 crore guide. Revenue at Rs 4,081 crore annualises below the guide, so the top line needs the second-half plant ramp to reach Rs 20,000 crore.

On the hard guidance, the enterprise value is about 14 times FY27 EBITDA.

Converting the EBITDA guidance to profit, with depreciation rising toward Rs 550 crore as plants commission, a low US cash tax rate helped by 100 percent bonus depreciation, and the EPIC associate contribution, FY27 clean profit lands near Rs 2,000 crore. That is about 21 times earnings. The Q1 clean run rate, Rs 499 crore excluding the EPIC gain, annualises to the same place.

Trailing profit tells the same story from the other side. Reported profit for the twelve months to June 2026 is Rs 2,309 crore, near 18 times. But that carries the Rs 548 crore EPIC one-off. Strip it and clean trailing profit is about Rs 1,760 crore, so the clean trailing multiple is closer to 24 times.

Order inflow slowing while the backlog burns, so visibility quietly shortens. Saudi approvals slipping and pushing the ramp out of FY28. The blended EBITDA margin sliding back toward the mid-teens over the next couple of quarters, which would mark the current 18.5 percent as a peak and not a base. A change in Buy America that removes the domestic premium. India water spend staying frozen long enough that ductile iron never contributes. On the multiple, a low-twenties forward P/E only holds if the FY28 step arrives. If EBITDA stalls near the FY27 guidance figure, there is nothing under it.

TenetFour Research. Educational analysis only. Not investment advice or a recommendation to buy, sell, or hold any security. Author may hold a position. Readers are responsible for their own decisions.