Welspun Corp Ltd. (WCL), a flagship Company of the Welspun Group, announced its consolidated financial results for the quarter ended September 30, 2023.
Sales volume of line pipe businesses in India and the USA for H1FY24 rose 57% YoY. Order Book for Line Pipes in India and US stands at 611 KMT valued at ~INR 8,000 crore 321 Stainless Steel Tubing
Associate Company, EPIC in Saudi Arabia has a confirmed order book exceeding 2 years. Execution of recent Aramco order of SAR 1.8 billion started. Steady improvement in DI Pipes sales with H1FY24 sales volume growing by 24x YoY to 73 KMT.
During H1FY24, Stainless Steel Bars sales volume rose by more than 3x YoY to 8,373 MT while, Pipes & Tubes sales volume grew by 46% YoY to about 2,484 MT.
Steady improvement in market penetration for both Sintex and TMT Rebars segments. In Sintex, WST sales volume for H1FY24 rose 16% YoY to 7,103 MT while TMT Rebars sales volume for H1FY24 stood at 48 KMT:
Consolidated revenue from operations for Q2FY24 and H1FY24 stood at INR 4,059 crore (+107% YoY) and INR 8,129 crore (+147% YoY) respectively. EBITDA for Q2FY24 and H1FY24 jumped more than 10x and 6x to INR 501 crore and INR 920 crore respectively. PAT for Q2FY24 and H1FY24 stood at INR 385 crore and INR 550 crore respectively, against losses of INR 57 crore and INR 52 crore during the corresponding periods previous year. Net Debt reduced by INR 520 crore to INR 315 crore in the current quarter and in line with our guidance.
Focus on increasing share of renewable energy continues across various segments. Aligned with UN Sustainable Development Goals through various social initiatives and programmes.
Strong focus on Governance with ~55% Independent Directors with illustrious and diverse backgrounds. Female Gender ratio in the Board stands at 38%.
While the IEA in its latest World Energy Outlook 2023, estimated global Oil demand to see a steady growth reaching to 101.5 million barrel/day by 2030, OPEC has a very strong outlook and expects global Oil demand reaching 112 million barrel/day.
According to the IEA, starting from 2025, a huge surge in LNG project is set to start off with addition of 250 billion cubic meters per year liquefaction capacity by 2030, which is equal to almost half of today’s global LNG supply. Most of these capacities will come between 2025 and 2027.
Oil prices globally have been hovering between US$70- 90/ barrel. Strong demand and ongoing geo- political tensions have been supporting prices.
As per the IEA, in the “Stated Policy” scenario, around US$ 190 billion is expected to be invested each year to develop upstream gas between 2022 and 2030, and a further US$ 40 billion is expected to be spent each year on LNG infrastructure; while the clean energy is also is going to be in focus, as per IEA under the “Net Zero Emissions” scenario, the projected spending will be around US$100 billion in each year on Hydrogen transport infrastructure by 2050.
According to the IEA, the investment in Oil and Natural Gas is set to reach a level of around US$800 billion and will likely to remain at similar level till 2030.
According the OPEC, the largest contributions to the Oil demand from non-OECD countries will come from India with 6.6 million barrel/ day addition between 2022 and 2045.
India’s natural gas demand is also likely to almost quadruple to 4.1-million-barrel oil equivalent/ day. Expanding city gas distribution systems are set to increase gas usage in the residential and commercial sectors.
Target to increase natural gas pipeline coverage by ~54% to 34,500 km by 2024-25 and to connect all the states with the trunk natural gas pipeline by 2027.Natural Gas exports from the USA at 20.4 billion cubic feet/ day for H1CY2023 has been the highest when compared to same period any year.
LNG exports in H1CY2023 rose by 4% YoY to 11.6 billion cubic feet/ day, which made the USA world’s top LNG exporting country. During the same time, natural gas pipeline exports to Mexico and Canada increased by 4% YoY to 8.8 billion cubic feet/ day.Half of the upcoming LNG capacity of 250 billion cubic metre/ day by 2030, will come in the USA and Qatar.
As per the Saudi Aramco, it expects to award contracts for 14 pipeline projects between 2023 and 2025. 12,000 km of pipelines is expected to be required for 90 projects that Saudi Aramco plans to award contracts for.
Saudi Aramco raised its upstream spending by about 24% to US$29 billion and plans further increase in spending to boost its crude oil capacity to 13 million bpd by 2027. Water desalination remains a major focus with the country heavily investing in these projects exceeding US$14.58 billion.
WSSL has witnessed clear turnaround during H1FY24. Backed by its integrated manufacturing process and diverse product offerings, the Company has a unique presence in its addressable market segment. SS Bars sales volume during H1 rose by more than 3x YoY to about 8,373 MT. Similarly, Pipes & Tubes sales volume rose by 46% YoY to about 2,484 MT.
WSSL made its foray into the USA and the first shipments have already reached. WSSL has successfully developed Super Austenitic 904L Bars as well as Pipes, Nickel Alloy 800 Bars as well as Pipes, Critical Heat Exchanger Tubes Ultra Low Cobalt Stainless Bars for Nuclear Power application.
The company has successfully commercialized precipitation hardened grades like 17-4pH and duplex grades both in the form of Bars as well as Tubes.
Existing business has been ramping up steadily with Q2FY24 Water Storage Tanks (WST) sales volume rising by 16% YoY to 3,565 MT. For H1FY24, WST sales volume grew by 12% YoY to 7,103 MT.
During the quarter, Sintex BAPL has reached an understanding with the state government of Telangana to set up a manufacturing unit in the state with investment upto Rs 350 crore.
Along with growing its market reach in water tanks segment, Sintex, a national iconic brand, plans to make its foray into pipes business through this project, which will have a mix of different types of PVC pipes and fittings.
Sintex has a pan India presence through its widespread distribution network of 900 distributors and 13,000 retailers. With strong business potential, we are exploring various growth options at current and new locations.
“I am pleased to share that our performance has further strengthened in the quarter gone by despite various challenges in the global macro-economic scenario. The Q2 & H1FY24 performance has raised the bar for the rest of FY24. Strong operational performance helped in sharp reduction in our debt level, thereby strengthening the balance sheet further.
While, performance of our Pipe Solutions vertical has been steady backed by strong execution capabilities, performance of our Building Material segment has been improving gradually. With its iconic brand presence, Sintex has taken a step ahead to foray into PVC Pipes segment in the State of Telengana. Along with focus on its existing business, foray into Pipes segment has been a step in the desired direction to unlock high potential value creation in Sintex. Our DI Pipes segment also has been ramping up well as per our expectations along with TMT Rebars. Stainless Steel Bars and Pipes has turned around completely with strong upside potential. I am happy that we have been walking the talk and committed to create higher value for our stakeholders” said B. K. Goenka, Chairman, Welspun Group.
“We have also been much focused on our ESG initiatives across the organization and sustainability will continue to be our key focus area” he added.
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