Welspun Corp spurts after Q4 PAT grows 47% to Rs 217 cr

Welspun Corp (WCL) advanced 3.74% to Rs 147.15 after the company's consolidated net profit jumped 47.40% to Rs 216.82 crore on 35.7% fall in net sales to Rs 1,727.23 crore in Q4 March 2021 over Q4 March 2020.

The company's current global order book stood at 528 KMT valued at Rs 4,800 crore (or $663 million). Cash and cash equivalents stood at Rs 620 crore in March 2021 as against Rs 314 crore in December 2020 and Rs 655 crore in September 2020. The sale of the PCMD division and the receipt of its consideration post 31 March 2021 has further strengthened its net cash position, which now stands at Rs 820 crore as on date on a consolidated basis.

 

Welspun Corp has generated Rs 723 crore of free cash flow for FY21. The company has fully utilized its existing tax credits in Q4 FY21. Accordingly, from FY22 onwards the company will switch to the new corporate tax rate of 25.17% from the existing 34.94% (both including surcharges).

During the financial year, Welspun Corp's consolidated net profit declined 3.57% to Rs 630.65 crore on 37.01% decrease in revenue from operations to Rs 6,146.65 crore in FY 2021 over FY 2020.

Commenting on the results, B. K. Goenka, the chairman of Welspun Group, said: "The sudden outbreak of the COVID-19 pandemic and subsequent meltdown in oil prices resulted in a year of unprecedented challenges for us. However, we demonstrated resilience resulting in a strong operational and financial performance and achieved the coveted 1 million metric tonnes of sales and the 2nd highest EBITDA in the last 10 years."

"Our employees are our greatest strength and we placed utmost priority on their safety, health and well-being. We also continued our focus on customer relationships, cash management and accelerating digital adoption. Our growth and diversification plan includes entering into the Ductile Iron Pipes business, TMT bars and stainless-steel pipes & tubes, all of which will further strengthen our business and grow earnings predictability and profitability."

"We are also accelerating our ESG initiatives with a very clear Roadmap for the future. With these initiatives, we embark upon a new journey of growth along with sustainability and are confident of creating incremental value for all our stakeholders and the community at large."

The board have recommended a dividend at the rate of Rs 5 per share per share. The board has also approved the annual renewal of the enabling resolution of the shareholders for raising of funds by way of private placement up to Rs 500 crore by issuing commercial papers/NCDs. The company has traditionally used this for raising commercial papers for routine working capital requirements.

In its outlook, Welspun Corp, said: "Sustained production cuts by the OPEC and OPEC+ and oil demand reaching rather exceeding pre-pandemic levels have continued to drive the price of crude oil upwards. In the near term, it is expected that the brent prices might average greater than $70/b in the second half of FY22. We feel that the strong demand and higher oil prices would act as catalysts to spur the demand for line pipes globally. Gas dominates the global mix, accounting for 82.7% of global pipelines in pre-construction and construction. The dominance of gas pipelines reflects the shift from oil to gas in the global energy economy."

For its India business, the company said that: "Energy demand of India is anticipated to grow faster amongst all major economies. The country's share in global primary energy consumption is projected to increase by two-fold by 2035. There is a big thrust on natural gas as part of the government's plan of raising its share in the country's energy basket. Therefore, an interconnected National Gas Grid has been envisaged to ensure adequate availability and equitable distribution of natural gas in all parts of the country. At present, there are about 17,016 km of natural gas pipelines operational in the country with plans to almost double this capacity. The Union Budget contained announcements to increase the use of natural gas, including addition of 100 districts to the city gas distribution network, and setting up an independent gas transport system operator to facilitate booking of common carrier capacity in natural gas pipelines."

"We did witness a recovery in the water segment post the first wave of the pandemic. However, the 2nd wave and all-time high commodity prices have slowed down activity in this sector. In any case, water will remain a key focus area in the country and we are confident to see bounce back in demand, both for line pipes and ductile iron pipes in H2 FY22. We continue to stay focussed in the export market. The recent award of the Barossa order on us from the Australian market and award of few other international projects clearly reflects revival of pipeline demand potential and opportunities in the export market. We are in discussion with several customers across geographies and are confident of bagging new orders in the near future."

Welspun Corp offers pipe solutions with a capability to manufacture line pipes, along with specialized coating, double jointing and bending.

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