Welspun Corp Ltd (NSE: WELCORP) Q4 2025 Earnings Call dated May. 29, 2025
Corporate Participants:
Salil Bawa — Head Of Investor Relations
Vipul Mathur — Managing Director and Chief Executive Officer
Ashish Prasad — Chief Executive Officer of Sintex BAPL
Analysts:
Ashutosh Somani — Analyst
Vikas — Analyst
Sailesh — Analyst
Shweta Dixit — Analyst
Pujan Shah — Analyst
Resham Jain — Analyst
Deepak Lalwani — Analyst
Ankit — Analyst
Presentation:
Operator
Ladies and gentlemen, good morning, and welcome to the Welspun Corp Limited Q4 FY ’25 Earnings Conference Call hosted by JM Financial Institutional Securities Limited. As a reminder, all participant lines will remain in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please the operator by pressing star zero on your touchstone telephone. Please note that this conference is being recorded. I would now like to hand the conference over to Mr Somani from JM Financial Institutional Securities Limited for opening remarks. Thank you, and over to you.
Ashutosh Somani — Analyst
Thanks, operator, and welcome everyone to the call. I will first thank Welspun Corp for giving JM Financial the opportunity to host today’s call. Without much ado, I’ll hand over the call to Mr Salil Bawa, Head, Investor Relations Welspun Group to introduce the management. Over to you, Salil.
Salil Bawa — Head Of Investor Relations
Thank you, Ashutosh, and good morning to all of you. I welcome all of you to the Q4 FY ’25 earnings call of Corp. Present along with me today on this forum is Mr Vipul, Managing Director and CEO; Mr Percy Burdy, Chief Financial Officer of Corp; Mr Ashish Prasad, CEO of BAPL and Gautam, who heads Investor Relations for Corp. I’m sure you must-have received the results and investor presentation of the company, which were also updated on the BSE and NSE as well as on the company’s website. As usual, we will start the forum with some opening remarks by the senior leadership team. We’ll then open the floor for your questions.
During today’s discussion, we may be making references to this presentation. Request you all to take a moment to review the safe-harbor statement in the presentation. Should you have any queries that remain unanswered after this earnings call, you please feel free-to reach-out to any one of us.
With that, let me hand over the floor over to Mr Vipul, MD and CEO of Corp. Over to you,
Vipul Mathur — Managing Director and Chief Executive Officer
Mr. Thank you, Saril. Thank you. And good morning, everyone. I welcome you all for the Q4 and FY ’25 earnings call — earning conference call for Welspun Corp. Let me start the discussion with the key operational and financial highlights of the concluding quarter and the full financial year of FY 2025. Follow will like to give you an update on the business environment, update on the investments we are making, the market outlook and the guidance what we wish to give for the FY 2026. Thereafter, we could have interactive sessions and I will be more than happy to answer all of your questions which you might have in your mind.
Just to start, let me now share the key operational highlights for the year. Firstly, our line pipe sales volume for India and US stood at almost 850,000 tonnes. Our DIP sales volume stood at 272,000 tonnes. Our SS stainless steel bars and pipe volumes stood at almost 19,000 tons and 4,800 tons respectively. Our centers recorded a sale of INR600 crore during this year. Currently, our consolidated order book stands at almost INR19,550 crores. This consolidated order book gives us a clear visibility of more than two years for our US business operations and And almost for one year for our India pipe operation, DI operation and SS Pipe operations. Additionally, the launch of Sintex Pipe at our Raipur facility and our readiness of OPVC pipes through our Bhopal plant offers further upside potential in the current financial year. Some of the key financial highlights of this year were, we have seen a consistent improvement in our performance during on a quarter-on-quarter basis. I’m sure you have tracked that. Our FY EBITDA — FY ’25 EBITDA stood at INR8,858 crore and with an EBITDA margin of around 13%. Our stood at 21%. Our PAT is almost INR1,908 crores. I’m also happy to report that the company was able to reduce their gross debt by more than INR1,000 crores despite having spent almost INR900 crores of — towards capex in the — in the financial year FY 2025. Currently, we are into a very healthy net cash position of INR1,050 crores. And considering the performance of the company, the Board has recommended that a dividend of 100% of the face value of the share. Let me now move on to give you my take on the business overview. Let me first talk about the pipes. If we see from India we are one of the largest exporter of pipes for very critical oil and gas applications, line pipes oil and gas applications. We are — we are witnessing an increasing trend in the offshore as well in the offshore pipelines globally. Thus these requirements are coming up with very stringent technical requirements, they are very, very demanding in nature and Welspun is only one of the two or three players globally who have the capability to meet such requirements. This positions Welspun into a niche segment in the oil and gas space globally and will continue to keep us ahead in the competitive curve. Further, we are also seeing that the market potential is building up for hydrogen and carbon capture pipelines where Welspun through its R&D, global approvals and participation in formulating the specifications is very, very favorably placed across the globe. As regards domestic oil and gas segment, we are seeing that the Indian government is investing heavily in expanding refining capacity, pipeline capacity, new LNG terminals to meet their ever-growing energy needs. We are seeing that the natural gas demand is — natural gas is expected to play a very large role in the India energy mix with the share of natural gas increasing from 6.7% to 15% by 2030. Also in the natural gas sector, the contribution of CDD, which is the city gas distribution accounted for 20% in FY ’24 and is projected to increase to 25% by 2030. So both the transmission and the distribution, the transmission of the expansion of natural gas network and expansion of CDD network in India over the next four, five years is going to be a cornerstone for Wellspun growth in the domestic segment. We are a dominant domestic player and we will continue to have our share in this particular business. Coming to the domestic water demand, we are seeing a significant emerging opportunities for pipes when we are talking of interlinking of rivers, we are seeing a push from center in the states like MP where we are seeing projects like Ken and PKC in states like Rajasthan, where we are seeing projects like ERCP and states in Maharashtra, we are seeing projects like Ganga, Nalganga project and the demand for the — and we expect that the demand for the pipes will kick-start this year. This will be followed by more interlinking projects under consideration in the northern part of India. We are also witnessing that states like Gujarat, MP, Rajasthan, Haryana, Tamil Nadu and Jaharkand are exponentially increasing the water pipeline network for irrigation, industrialization and urbanization purpose. As you know, Welspun assets are based out on pan-India basis, we are present in West, we are present in central and we are present in South. This gives us a unique reach to address all the demands which are coming up in these states. Let me now move attention to the exports or other markets, which is the US market. As you know, we are one of the most dominant player of line pipeu or dominant line pipe producer in the US market. Currently, we have a market-share of more than 30% in that market. As you have also noticed that we have a confirmed order book of more than two years at this point in time. On-top of it, we continue to see a very strong visibility of line pipe demand in the US sector. We are seeing a clear visibility of next three to five years at this point in time after this two years after consuming of this two years of an order book. The crude oil production in US is likely to go up to almost 14.5 million-barrel per day-by calendar year 30 and the Permian production, which is the largest oil and gas producing field is likely to increase from current 6.2 million-barrel per day-to 8 million-barrel per day. So this increment, which is happening in the Permian is — will continue to show a very, very strong demand for oil and gas pipelines in the US market. On-top of it, we are also seeing the LNG exports going up from 90 million tons per annum to 120 million tons per annum in the next two and three years. There will be a huge surge of our LNG exports, which will be happening from US to the European and to the Asian markets. We are well-poised to benefit from this US oil and gas market demand and we are confident to maintain our share — market-share in the future times to come ahead. As regards Saudi Arabia, you know, Saudi Arabia is distinctly between — is distinct between two segments, water and oil and gas. As regards water, we are continuing to seeing a robust demand with a very — and we are seeing a very strong visibility that there is a continuous focus on improving the water infrastructure with rise in population over a period of time and infrastructure being built, the need for water transportation and distribution will improve further. We have — we have a dominant presence in that particular market and we are — we have — we almost capture more than almost 40% to 45% of the market-share at this point in time in-the-water sector. On the oil and gas side, the vision — the Saudi vision of 2030 is — the aim is to expand their domestic gas production further and to reduce reliance on crude oil for electricity and industrial process, which means that they intend to use gas for their domestic purpose and they want to export — if export oil for globally. This — this will include now a significant investment in both development of onshore and offshore fields in times to come. Also, we are seeing the Saudi government is making significant investments in the unconventional fields like unconventional energy needs like hydrogen and carbon capture. So the line pipe requirement or the pipe requirement both for the water as well as for oil and gas sector in Saudi Arabia remains robust and we say we stay very — we have a very strong outlook and we stand very positive for the development in this particular sector. As regard our DI pipes we have a confirmed at this point in time, we have almost a confirmed order book of more than 350,000 tonnes for the DI pipes. This is almost one year of order book for us. However, you know, in the — in the previous quarters, we have seen a little bit of a slowdown in towards release of funds under JJM funding, but we have now seen that this pain seems to be getting over. We are expecting that things will start improving from the end-of-the first-quarter, beginning second-quarter of FY 2026. We have started seeing the improvement, the cash flows have — we have seen the cash flows started coming in and I’m sure this will — things will only improve from here on. There are multiple projects which have been announced in FY 2026. A lot of distribution network is being created across the states of Pradesh, Maharashtra, Rajasthan, Gujarat, and I think so and that it gives us a very strong belief that the demand for DI pipes will continue to stay strong in FY 2026 as well. We have as a part of our strategy, we are Also spreading in the domestic markets like Haryana, has got Punjab, Orissa, Telangana and Kerala. While from a freight perspective, these are not very lucrative markets for us, but from a presence perspective and as a strategy, we are making a foray in this particular — in these markets as well. On-top of it, we are also focusing heavily in terms of exporting the DI pipes. As you are kindly aware that we have opened up a subsidiary in Europe and we intend to export DI pipes to Europe as well. I’m also happy to report that we have made the first shipment which has been received there and it has been delivered to the customer and it has been received extremely well. Moving forward, our focus would continue to be on the domestic market, domestic market expansion and the export. I am sure that these three — these three pillars put together will make — will allow us to be a dominant player into the DI pipe industry. Further, as you are also aware that we are investing for the DI pipe facility in Saudi Arabia. The market scenario and the opportunities for DI pipes in Saudi remain extremely strong. There is a very-high demand for supply for the supplies and which will immediately, which is towards import substitution. At this point in time, the local DI players are unable to meet the requirement of the Saudi market. There is a huge imports which are taking place and I am sure that once Welspun DI facility will come up on — come up in Saudi Arabia, which I will subsequently cover on the timeline side of it. We will be able to ride-on this wave and it will — it will set us a very, very strong base as a local DI player in the Saudi market. Coming to the — our niche stainless steel bar and the pipe business, we have a great year. The FY ’25 was a very defining year for us. The company has really met all the expectations what we had said. FY 2026 has also started on a great note and W’s and our company — we have received an order of almost 4,000 tons from BSEL for SS tubes for super-critical power plant, reinforcing our position in the growing segment. This order will see to it that our pipe capacities are completely booked for almost throughout the year. We are also focusing heavily in terms of exper making high-grade, high value-added steel. As you know, this is the only facility which is an integrated facility where we make our own steel, where we process our own steel, where we make our own pipes. So this is the only integrated facility. We are now focusing in terms of expanding our base in the stainless steel market as well, both domestically as well as exports. We are seeing a good traction coming up both for the pipe and the steel in the value-added segment like defense, space, power gen, oil and gas, petrochemicals, etc. So this company through its pipe, stainless steel pipe and steel is absolutely poised and on — to grow from here on. Coming to the, we have — has two distinct businesses, one is the water storage tanks business and other the plastic pipe business. Let me dwell over the water storage tank business. This year has been a year where we have grown despite the market have strung and that is a clear reflection of acceptance of FinTech’s brand in the domestic market. We have been pursuing rigorously our channel expansion. You know that today, I am happy to report that we have more than 13,000 partners associated with us and almost 15,000 plumbers associated with us who are the flag for Welspun brand. Akish, if I right on my numbers? 30%. Slightly larger number, but that’s slightly larger numbers. Okay. Okay, sir. The team, the team out here, led by Ashish is doing an exceedingly good job in terms of propagating this brand on a pan-India basis. We have — we are also focusing strongly on the brand-building. We have increased our brand visibility through brand sponsorship with WPL, continued BTL activities in print, TV and OOH media campaigns in the launch markets. Our focus is also to be a premium player. So we are — our sharp focus is on the premium segment. Our premiumization strategy continues to drive our value growth, supported by sustainable expansion of the pure franchise. I am sure you would have quite a few questions around the and Ashish is here and I’m sure he will be able to address all of them and this will add us in the Q&A session. Coming to the Pipe business, there we are operating at two establishments at this point in time. One is at Raipur and other it is at — other at Bhopal. The Raipur facility, which is the facility is now fully operational and we have launched multiple products, which have been well-received in the market. We have for the very first time introduced the world’s first proven anti-microbial CPVC pipes. The facility at Bhopal, where we are setting up our first OPVC pipeline as received its BIS approval. We are — we are now aggressively going to-market and build-up our market-share over the next few months. We are going to enhance or increase our OPVC capability starting after, we will move on to Raipur. And we — our intent is very, very clear that we will be a formidable player in this value-added OPVC market. I would also like to cover our building materials, the other part of the building materials, which is the TMT bar segment. This year, we achieved the highest sale of 211,000 tons in FY 2025. We are a formidable player in Gujarat, where we are seeing a substantial demand coming from various infrastructure projects which are happening in the state. We have been able to expand our customer-base and other key and noticeable customers happens to be the Lions, Adani, IGT Cementation, Pro, Pro who are pursuing large infrastructure projects in the state. And we being a — we being a quality player within Gujarat, we are in the best — we are in a very formidable position and expanding our base for supply of TMT pipes in Gujarat itself. Our quality has been recognized as one of the premium quality. We have been recognized as one of the premium quality players and our brand, the Shield has created a niche for itself. So these are the few business updates, which I wanted to give you about all the business segments what we have. I would now like to draw my attention to the investments what we have made over the period of time. These investments, there are few investments which we have notified to you during the quarter three, also during our investor call-in November and there are few more investments which we have cleared and they are very synergetic in terms of — in terms of growing Welspun — taking Welspun Corp to the next level. Our key focus — our key focus remains intact that we will only participate in core geographies and core products, that is the we are working, we have agreed to work on and that is the — it is in these guardrails we are working. Apart from the — apart from the few projects which we have already notified announced and for which I will give you an update subsequently, in our Board meeting yesterday, we have also cleared some two or three new projects and I would like to draw your attention to that. Looking at the demand of the oil in the oil and gas sector in the US market, where — and also the change in the dynamics which is happening in the US market, where there is no import which is now going to happen in times to come. They — because of the trade restrictions and the policies and the import duties which have been put up by the new current administration. There will be a huge demand, which will be coming up for LSO pipes. Traditionally, from India, we had been supplying Elso pipes for the offshore application on for the LNG applications from India on almost 150,000 tons on a year-on-year basis, but that business globally will now go away, which means that there will be no heavy wall pipes, which will be coming to US through import route. So considering all those factors, considering the potential it offers now and in the future — for the future for the next five to seven years, we have decided to set-up a greenfield Elso pipe manufacturing plant, which will include a DJ and a coating plant with a capacity of 350,000 tonnes. Apart from that, we have also decided to exit — to upgrade our existing spiral facility In India. This facility is a hybrid facility which had a post — which had a provision to make spiral and ultra pipes both. However, we have always been using this facility as a spiral pipe facility. What we have decided now to make it completely hybrid at it was earlier — originally and we are only agumenting the forming facility into that. So this is a minor upgradation which is going to happen there. Thirdly, along with these pipes, we are seeing a strong demand coming for hot induction beds. We are the player for the hot induction bench. Hot induction bench are part and parcel of the line pipe business. We have been a player into this particular field. But when we are seeing — we are seeing a huge demand, additional new demand with very stringent specifications with quenching and templing requirements coming up. Basis considering all that and this requirement and this being a very value-added segment, we are now setting — we have decided to set-up a brand-new state-of-art pipe bending setup at Anjab. Lastly, as we told you the last-time, we are enhancing our pipe making facilities at Bhopal, where we are seeing a huge demand coming up in respect of interlinking of water rivers and the water demand and distribution that facility will also require some calibration for the coating. So basically, we are also adding up a coating facility to meet that the gaps between the pipe and the coating out there. So we have decided to set-up a coating facility at Bhopal. So these are the — these are the four additional investments which the Board has cleared yesterday and I am very sure that all these apart from the greenfield LSO pipeline project in USA, which is going to be a game-changer. The other three are more of a capacity agumentation and capability enhancement and they will be able to bring a significant amount of a value-added and profitability to the top-line as well as the profitability. Further, we have also — we have also decided to drop our expansion in the DRI capacity as we want to stret — we want to keep our strategy focus on high-priority value-added business segments. So at this point in time, we have — we have decided to not to pursue with our DIRI expansion. As you know, we have well demonstrated our investment rationals in the last few years, which has held the company to significantly scale-up its performance. Now as we move forward with the ongoing project along with the new ones, it will further strengthen our leadership position globally in our core product and core geographies mission. So if you recollect, we had announced that the total capex, capital expenditure will be close to INR5,500 crores over the last — over the next two years, which is FY ’26 and ’27. And with the calibration what we have done, we would still be within the same capex which we have announced even when we are announcing the new facilities. So there is no going — there is not going to be any — any additional capital in capex which we are announcing. We are well within the announced limits even after adding the three or four facilities what we have spoken about. Most importantly, our balance sheet still continues to remain strong. As you have — as I said earlier, our cash — we are a net cash company. We have a strong cash available of almost INR1,000 odd crores. Our — so our balance sheet remains very, very strong despite this capex spend. Spend and we are very sharply focused to be a net-debt positive company. Despite making all these capexes which we will do over the next two years on a year-on-year basis, we have — we will be — we will continue to be a net-debt positive company. Lastly, as regards to the guidance, we have — we are — as we see that the — considering the landscape what we — considering the landscape what we have, considering the order book what we have and considering that the potential what the company has, we are where we are — we are significantly enhancing our guidance for the FY 2026, we are giving a guidance for the revenue of almost INR17,500 crores, which will — which could be 25% higher over the FY ’25 actual. However, the most important factor to be focused upon is the EBITDA guidance where we are giving an EBITDA guidance of almost INR2,200 crores, which is 18% over the FY ’18 actuals. If you recorrect, friends, I had in my — I had in my investor meet in November and in all subsequent quarter calls, I have — we have maintained that we will grow at a 15% CAGR. Last year, we got — this FY ’25, we achieved an EBIT INR1,850 crores. For the FY 2026, we are giving a guidance of INR2,200 crores, which is 1,800 — which is 18% over and above the last year. We believe in walking the top and I am sure if you see our performance over the last three years where we have given you the guidance, we have always maintained or exceeded what we have committed to you. Thirdly and most importantly, at, we continue to focus on the same and we are committing a of more than 20%. And if you see this guidance was also given for the last three years and we have been able to maintain our ROE exceeding 20%. So our top-line guidance of INR17,500 crores, more importantly, the EBITDA guidance of INR2,200 crores and a Rose of 20%. Along with this, we also — I am again reiterating that we will keep our net-debt to EBITDA less than 1 less than 1 which means there will be all the capex investments which are going to happen. You know, they are absolutely being done in a very, very calibrated manner. All the existing business are generating sufficient free-cash flow. We are not going to increase our debt. Our net-debt to EBITDA, which we are very, very mindful of will be always be maintained below one. Last but not the least, our focus on digitalization, our people and sustainable journey remains intact. I am very happy to share that Wellspan now ranks among the top-10 in the global steel industry and second among the Indian steel payers at S&P Global DJSI Corporate Sustainability Index as of April 2025. Our people are our strength. We are investing heavily into their upskilling growth. We are automizing, we are move — we are — we are becoming a very, very systematic and process-driven organization. We are investing heavily into digitalization and we are creating a foundation and very strong pillars for this company to follow having a catapulated growth in years to come. With this, I want to thank you for joining us today and I will request the moderator to open the floor for any questions, your friends and the gentlemen might have it. Thank you very much.
Questions and Answers:
Operator
Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use their handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Vikas from PhillipCapital. Please go-ahead.
Vikas
Good morning, sir and congratulations on good set of numbers. My first question is regarding the guidance, while the revenue is growing by 25%, but EBITDA has grown by 18% only, especially when US is expected to fire. So is the domestic business going to perform poorly on a Y-o-Y basis.
Vipul Mathur
Good morning with us. I think so, as I said, you know, focus on the top-line should be your least of your concern because the top-line is a factor of the steel pricing, which is a pass-through for us. I think so, as I have always mentioned, Vikay, I think so it will be more prudent to focus on the EBITDA numbers because that is what in my control. The top-line is a factor of steel and which is not in my control. So it is a pass-through. So it is no reflection of India not doing well or US doing better. It is not a reflection of that. It is purely a reflection of that the current state of numbers at the steel price which is behaving. So my request would be to you and to all to continue to focus and track our progress with respect to EBITDA, please.
Vikas
Understood. Sir, my second question pertains to. While our — basically capacity remains the same, our capex has come down to almost INR1,000 crores also exactly what has happened there? What portion we have changed to inside that kind of the season?
Vipul Mathur
So because the — as you said, when as you — as we have mentioned, the capex of what we Have earlier announced was triggered over multiple years. It was not supposed to be done in one year time. All what we are trying to bring in a very clear visibility that what is the capex which we did in FY ’25, what are we going to do in FY ’26? What are we going to do in FY ’27? The whole objective of bringing this is to bring clarity to all the investors out here because by saying that I am going to invest INR2,400 crores, I think so there were certain appreciations in mind or we were not able to explain clearly that a few of the people thought that we are going to invest that money in day-one. It’s not going to happen. It is scattered over a period of time. All what we are trying to bring in is a clarity for the next two years.
Vikas
So sir, the corresponding capacity regarding INR1,300 crores, what will be the corresponding capacity addition, out of this 200?
Vipul Mathur
So the major — the major capacity additions would be on the OPVC side of it. As you know, currently we have set-up — we have added capacity for OPVC pipe in Bhopal. We will now add the OPVC capability in Raipur and there — and which should happen by the end of this year. And thereafter we are looking for capability — capacity addition in the South. So these are the three capacity additions most likely which are going to happen over the over the next 18 to 24 months time or 18 months time, let me put it this way.
Vikas
And tonnage would be, sir, combined all these three.
Vipul Mathur
OPVC may not be the right — can it may not be the right way of looking at the OPVC pipes because when we have to talk about OPVC, we will have to talk about what sizes we are adding, how many machines we are adding, what is the linear meters we are adding. I think so that will be the right metrics to discuss because tonnage has no relevance at this point in time you talk of from an OPUC perspective.
I think so we can have a sort of an offline to explain you more in detail that what does OPVC mean, how many lines we are going to add, by what timelines we are going to add, what it will add into the linear meters, what percentage of market-share? I think so these are certain questions which we can we can we can apply you offline.
Vikas
No, sir. Sir, just one last question. If you could give us the sales EBITDA and PAT of SinTex and in guidance, what is the guidance for separately, it would be really helpful.
Vipul Mathur
We have given a consolidated guidance. Is embedded into that. Just to give you the comfort, you know that is absolutely a company which is very sharply focused internally. They have been doing exceedingly well in the last 12 months despite that the market has significantly calibrated downward. But I think the way has proven their metal and they have regained the market-share and maintained their premium positioning, that’s a commendable work they have done at this point in time. The company in this syntax will continue to be in our focus and their guidance, their revenue, their top-line and their earnings both are embedded into the guidance what we have given.
Will be difficult to split it out separately, but be rest assured that it is absolutely a company which is on a growth path and on our focus.
Vikas
Yeah. Understood, sir. Thank you for the opportunity and all the best for.
Vipul Mathur
Second because I’m sure — I think so the CEO, Ashish also may have a view to add to that, Ashish plan.
Ashish Prasad
Thanks, Vikul.. Good morning. I think what we are trying to do is is a premium play. And as you would have heard us right now, we are driving premiumization. And premiumization is driving our growth. So we are obviously a profitable company and improving on profitability. But we’re — that’s what we are doing.
And everything which we are trying to do, we are trying to build a plus one distinct advantage. And I think that’s the strategy which we would like to reinforce the market and because we want to play not the tonnage game, but we really want to play the value-creation game.
Vikas
So you are implying we are PAT positive as of now.
Ashish Prasad
Yes.
Vikas
Okay, sir. Thank you. Thank you.
Operator
Thank you. The next question comes from the line of Radha from B&K Securities. Please go-ahead.
Sailesh
Hello, sir. This is here. Thanks for the opportunity. Congratulations for the strong performance in this challenging times. We are entering the Diesa pipe segment in the US along with setting up a coating facility. So could you provide insight on the market size of this product in the US? Who are all the key players currently operating in this space? And what gives us a competitive edge or right to win in this market? Additionally, how do you view the longevity of demand for the diesel pipes in US? So given that the planned capex exceeds INR1,000 crore along with the associated working capital requirement, what kind of payback you are expecting?
Vipul Mathur
Good morning, Salesh, and thank you very much for joining this call and asking a great question. You know, first and foremost, we have to clearly recognize that Welspun is one of the most dominant player in the oil and gas space, especially in the line pipe in the US market. We have a formidable presence there at this point in time. We are currently we are producing spiral pipes. We are also producing HFIW pipes and we enjoy almost close to a market-share of more than 30%.
The Desaw pipe story was a little different. We were not a player there because the pipes was not being produced. There was just one player who was producing that pipe. One — one big player and one small player, those who are producing that. But largely — and they also had a limited capability to produce. So largely all — most of the diesel pipe was coming as an import. Historically, this market is anything between close to 400,000 to 500,000 tons on a year-on-year basis at this point in time. And it has been regular over the last seven to eight years.
When we did our study, we were very clear that the next five to seven years also look very, very buoyant and the demand is going to be consistently around close to 400,000 to 500,000 tons if it — and it has a potential to go up if this LNG LNG processing gets further expedited. So that gives us an opportunity to venture into that particular market.
Now when the new restrictions are coming in, there is — and the demand for made and melt in America are growing there and no imports can happen for the diesel pipe. So here was an opportunity for someone like Wellspun to go-ahead and complete its portfolio. Typically, the portfolio of a pipe industry consists of our DSO pipe, which is the pipe, Spiral it FIW. So we are — we have two assets there, which are spiral and HFIW, which is one of the top — the top-performing assets. Only the DSO was missing and now this opportunity, this opportunity which came up the table, we analyze it and we see a significant merit going into that.
So we are very confident that we should be able to leverage and create our market-share and get our market-share for this particular facility. At this point in time, it will take around 15 odd months-to set-up this facility and once that is being done, and you know we see a clear market potential for the next five to seven years’ time.
Sailesh
Very good to know this, sir. Currently, we generate an EBITDA of INR230 per tonne in our US operation. What kind of EBITDA do you expect or what is the payback you are expecting, sir, in this right.
Vipul Mathur
So all that what is — it is clearly suggesting us that the payback would be anything between three to four years, less than four years.
Sailesh
Okay, great, sir. Sir, my second question given the opportunity you highlighted in Saudi market and the expected oversupply situation in India next one, two years, so where do you see better potential for ROCE? Would it be more prudent to scale-up operation in Saudi or rather than rather than expanding further in India, especially since market dynamics there in Saudi appears more favorably? So I would assume the ROCE from Saudi structurally stronger compared to India DI segment. Would it be fair assessment what is your view on this?
Vipul Mathur
So we are reading a little too much in the DIP India story at this point in time, I think so the last two quarters have been a little — they have been down — we have seen a downward trend, but that was because of the cash-flow issue. The demand, if you look at it, the demand continue — looks very, very robust, number-one.
There is a lot of work which is still to be done under the mission. I think so it’s almost still 40% work is yet to be done. And we are seeing — we are clearly seeing signs that the government is committed to get this work done. Only in the last one or two quarters, we have seen the slowdown in terms of cash-flow. But in terms of demand, I don’t think so, Salesh, we are seeing anything going down.
So we continue to see that with the requirement for DI over the next three, four years in India will remain strong. Saudi is a different story altogether. Saud, the logic going to Saudi has a different connotation altogether. Saudi is more to look, there is a huge imports which are happening there and it is our intent that we would like to be a local player in the Saudi market and that is what the need of that particular market is.
So I think so we’ll have to distinctly look, evaluate Saudi separately and India separately. And for India, I don’t see any reason of an undue concern in days to come.
Sailesh
Okay, sir. Sir, in, how many lines we have added so-far?
Vipul Mathur
Currently we have added — we have added two lines. We have started with two lines at Bhopal and we intend to add additional four lines in months-to come and that will be spreaded over at Raipur and somewhere in South. So our plan over the next 12 to 15 months time is to add additional four lines in PVC. We are very clear that we want to be a very dominant player into the OPVC market.
Sailesh
So each line will have 3,000 or 5,000 tons, sir.
Vipul Mathur
It depends. Depends,, again, the sizes what you are making. These lines are typically from anything from 80 millimeter to 260 millimeter. We have — we have gone with a very optimized designs of these lines where we are bringing a capability for small diameter and also we are bringing capability for higher diameter. So depending on what — how are we going to use it, the will keep on changing. But what is more important is that we are going to have a fairly pan-India geographical presence to capture to this market.
Sailesh
Okay, okay. Great, sir. Thank you, sir. All the best.
Vipul Mathur
Thank you, Salesh.
Operator
Thank you. Ladies and gentlemen, if you wish to ask a question, please press star and run. The next question comes from the line of Shreta Dixit from Systematix Group. Please go-ahead.
Shweta Dixit
Hi, good morning. Thank you for the opportunity. Sir, could you just highlight of all the set of expansions that are happening as of now in the US and the timelines when they get commissioned along with the new to new capacity expansion that you’ve announced today.
Also, your thoughts on the narrative, like earlier what the narrative was that these pipes since they are not manufacturers since the capabilities within US are limited, that is why we were not expecting a lot of impact on imports. Now that seems to have changed where we are now planning to set-up this facility. So what has changed in these few months of to decide to go and set-up this capacity there?
Vipul Mathur
Yeah. So, just to answer your first question that what are the expressions and what are the timelines. I will request if you go to my investor presentation and if you look at the Slide 14 of 18 there, you will get all the answers there. It lays down completely all that what we are doing, what are the expenditure we are going to do and what are the timelines with that. So I think so that will give you a very fairly comprehensive picture around that. If you do not have it, I will ask Gautam here to share that investor presentation with you separately. So that will give you the answer, number-one.
Number two, with respect to the narrative for the LSO pipe, we were not a of Pipe player in the US market. We were always a spiral and HFIW player and I have always maintained in my narratives that there will be no import of spiral price which will happen into US and it was not happening. Because there was an import of LSO pice, which was happening into the US, we were not commenting over it because we were not a player. We were supplying out of India and companies like from Japan, companies from Europe were also supplying those pipes to US market.
So I never said that I spoke about the pipe because we were not a domestic player. Now with the change of scenario where there is a complete restriction which is happening for the imports of pipe, including the longitudinal pipe, it is a scenario something very similar to spiral pipes, where now the government they are very clear that all the longitudinal pipes has to be met and make in America as was the case or as-is the case with the spiral pipes.
This is a change which has happened. You know, there is an opportunity. So there is a change which is happening. There is an opportunity which is emerging. We are one of the largest player in the line pipe sector. We want to maintain our leadership particular position in that particular market. I have a market-share of more than 30%. I have to protect my market-share. Here is a brilliant opportunity which is coming up on the table. Who else other than Welspun will not like to capture this opportunity? And that is how we have got it?
Shweta Dixit
Understood, sir. Sir, next question, I mean, what would be your consolidated capex guidance for FY ’26 and ’27, annual capex, what is it likely to be versus INR900 crores that was spent this year?
Vipul Mathur
Shweta, again, I would say, go back to the investment, it clearly shows that we are — we have announced — earlier, we have announced a capex of almost INR5,500 crores, you know sometimes almost six months-to nine months back, we are within reduced capex only. And this capex is going to happen over the next two years.
Shweta Dixit
So if you take INR5,500 crores, INR900 crores roughly being spent already that still that INR4,500 crores, so that brings us to a number of around INR20 crores INR200 crores annually for the next two years. Is this calculation correct?
Vipul Mathur
It may not be the — may not be the right way of looking because capex are staggered over a period of time, they are more back-end loaded rather than front-end loaded. So there is a — we’ll have to see a little more into detail. But you know from a simple arithmetical perspective as what you are saying, maybe right may not be right, but I think so the right way of looking at that they will be more back-end loaded rather than friendly loaded.
Shweta Dixit
Okay, understood. Thank you, sir. I’ll come back-in the queue for next question.
Vipul Mathur
Sure. Thank you,.
Operator
Thank you. The next question comes from the line of Pujan Shah from Molecule Ventures. Please go-ahead.
Pujan Shah
Am I audible?
Vipul Mathur
Yes, please.
Pujan Shah
Yeah, yeah. Yeah. My first question would be on the OPVC side. So currently, we have been seeing that there is a good traction in this space as well as the — what we have made in agreement with, they are also planning to expand that capability — the capacities in India. Right now, what we have been hiring in the was that we want to plan form for. We have — hello, hello. Yeah, what did you say, the last center space?
Vipul Mathur
Yeah.
Pujan Shah
So what we have been planning to invest in the OPC is 10 lines total. So right now what we have been started is two lines in and four lines will be coming in 12, 15 months. So currently, wanted to know what is the current capability of rollable right now so that our aspiration to build and make the market-share can be prominent enough in coming years?.
Vipul Mathur
MR. Shah, I don’t think so. You should have any doubt whatsoever in that — in that, number-one. Number two, has an exclusive understanding with Wellspun. This year, we are planning to bring in six lines. Two lines have already come in. The other two are likely to come. And the third — the third pair of two lines will come by, let’s say, by the start of the next year.
So — and as you know, as we — as we — as I said earlier, we are to — we are going ahead with six lines planned at this point in time, right. Two of them are already commissioned, two of them will get commissioned by the end-of-the year and the next two will be somewhere towards the start of the next financial year. So that’s the roadmap we have clearly outlined at this point in time.
Further, as I said earlier as well, plan is — we are — we are talking of a plan, staggered plan and a investment in a calibrated manner over the next three to four years time. So all what I’m clearly outlining today is that what we are going to do in the — over the next two years’ time. Over the next 12 months-to 15 months’ time, you would see at least six OPVC lines fully operational under Welspun Belt on a pan-India basis. And that should give us a sort of a significant leeway into and become a player, a significant player in the domestic OPVC market.
Pujan Shah
So what are us to summarize this saying, so there is no shortage from the suppliers. So roller can manufacture six lines in a year, right?
Vipul Mathur
They can do that. They are — that’s what they can do. That’s what our understanding in agreement with them is.
Pujan Shah
Okay. Okay, got it. And sir, on the content supply right now, we have been opening up in and second, the opportunity we’re focusing on Raipur. So it’s a pretty good market. So do you think this market has been — so we can cater enough in that there would be a flow — enough tender flow will be opening up in this space. That’s — because right now to slowdown in, there is a bit of lab there which has been happening in the OP business?
Vipul Mathur
We have a strong reason that you know this flow and this demand will continue to be there. Please understand this OPVC market is in the small diameter. They are only anything from 80 millimeter, let’s say, to up to 250 or 300 millimeter. This is a market which is — which is which has a very, very strong demand. JDM is an at this point in time.
As I said earlier to the last two per quarter issues of JGM cannot be pointed as the way forward of JGM. There is a lot of work, it is a mission on which government of India is working. And we have seen in the past that when the government of India takes anything as a project, as a mission, they bring it — they Always complete it. And there is a lot of intrinsic socioeconomic benefit which is coming out of this particular mission. We have all the reasons to believe and all the indications to believe that JJM will continue to stay strong for the next five to seven years’ time. And in this both OPVC as well as DIP will get completely consumed at interest.
Pujan Shah
Got it and just wanted to understand the capex amount for the OPVC. So how many — so what’s the amount we have been planning to spend?
Vipul Mathur
Or see it we have — we have INR6 you know, we have announced a comprehensive capex of INR1,300 crore over the next two years. That’s the way it looks like. We have only spent close to INR300 odd crore in the first year, which was in FY ’25. Between FY ’26 and ’27, we will be spending additional INR1,000 odd crores and it will be largely on OPVC pipes. Also, there would be some upgradation and calibration of our water storage facilities and some SBP balancing line. So it is a comprehensive capex which we are going to do. But largely it is focused about OBC.
Pujan Shah
And my last question would be, so what’s the aspirational margins we have been in this space?
Vipul Mathur
What will be the
Pujan Shah
Aspirational margins, EBITDA margins we have been eyeing for you
Vipul Mathur
Business is definitely a mid-teen margin business for sure. And I am sure that we should be able to — we should be able to get that, if not exceed that.
Operator
Thank you. We take the next question from the line of Resham Jain from DSP Asset Managers. Please go-ahead.
Resham Jain
Hi, good morning,. First of all, congratulations and very good transparent communication, I feel. So congratulation on that as well. Sir, I have just one question on the US orders which we have won in the last 3/4, two quarters specifically. In the past two years back, we have seen that you have got advances also from the customer in — along with the orders and the price variation, whatever has happened is completely hedged in a way because of that. But this time when you receive the order, we have actually not seen inventory going up along with it. So how are you looking at the overall because there’ll be volatility in the metal prices. So how are you hedging and how should we ensure that our margins will be range-bound.
Vipul Mathur
Yes. Good morning,. Thank you very much for joining. To with respect to this US orders, there is no fundamental change as to what has happened the last year and versus the order book what we have this year. These orders are all first and foremost confirmed orders. Number two, the steel is fully hedged. The — as we speak, the steel is getting being produced. And in a gradual manner, the steel — the inventory buildup will happen. So in terms of any risk we are carrying on the steel, if that is their concern and that portion which, please be assured that there is no change in that, there is no-risk on that.
Resham Jain
Okay, understood. So should we assume similar range-bound kind of margins. Obviously, some volatility will obviously be there, but it will be range I am agnostic to volatility because I have already covered the steel. I’m completely hedged on the steel. So my price is so I’m completely covered. So there’s nothing called volatility or uncertainty into the margins.
Understood. But you have not bought steel, it is mostly booked because last-time, two years back, I remember we had bought also and customer has given us advances also against that. It just does not see the time.
Vipul Mathur
Well, it is the same case,. We have only booked the steel as the steel will start — the steel inventory will start building up, the customer will keep on paying for the steel. So there is no change in that. But the steel is completely booked. What you’re looking at the inventories, our inventories are little lower at this point in time in comparison to the last year, but you will see over quarter-on-quarter, they will start getting building up and they will be all customer paid-in inventory. We restricted on that.
Resham Jain
Understood, sir. Very, very clear and all the best. Thank you.
Vipul Mathur
Thank you.
Operator
Thank you. The next question comes from the line of Deepak Lalwani from Unifi Capital. Please go-ahead.
Deepak Lalwani
Hello, sir. Congrats on a good set of numbers. I had a question on the DI pipes in India. Although we know that 1 is a long-term vision, I just wanted some short-term insight on the business. So the cash crunch and the inventory in the system has — will it impact execution, order inflow and the EBITDA spread that we make in this business? This is a short-term statement that I want from you? And also the second thing is that you rolled back your capex here in the DIS by segment. So is it a situation currently of oversupply and less demand? So these two aspects.
Vipul Mathur
Deepak, let me take your second question the first. I don’t know when you mentioned that we have rolled back our capex on DIP. We have not. Actually, we had gone ahead with the DIP expansion and that expansion stands completed and we are doing — it is currently under trial at this point in time. So we have not rolled back any capex suspension on DI bikes, number-one, because we fundamentally strongly believe into this particular business, number-one.
Number two, coming back to the pricing part of it, you know, at this point in time, we have, as I said, we have close to 350,000 tonnes of a confirmed order book what we have, number-one. Pricing is a factor of the market. At this point in time or is full 350,000 tons booked at the same price? The answer is no. They have been booked at different price — different times at a different price levels, number-one.
Number two, moving forward, you know if we are seeing that there is — to an extent, your point is right, Deepak, that we have seen that correspondingly what was in-quarter one of the last year, the pricing prevalent at that point in time versus the pricing prevalent in-quarter one of FY ’26, there is a difference. The prices have calibrated downward. So has the cost. So at the end-of-the day, the margins — the EBITDA margins or the contribution margins are — are very well-protected even at this point in time.
So we are seeing — if you see — if you — I’m sure you are tracking the global queues with respect to iron-ore and the coal and which are the two major factors demand deciding the pricing. They also — they have also get significantly calibrated over — from quarter one of the last year versus the quarter one of this year. So in terms of margins, I think so we have been able to protect our margins, number-one.
Number two, in terms of demand, we are very, very buoyant about the demand. This is a project business, cyclical business, we all know that. 1/4, two-quarter here and there demand can be low, there could be some cash-flow challenges because at the end-of-the day, it is government buy. But then you know, is it — is it creating any potential threat? I don’t think so. And I believe that the industry with whom we are also a part of it. And when we there, I think in the industry per se feels bullent about it.
Deepak Lalwani
Understood. Got it. And secondly on, if you can give out the revenue and EBITDA that we generated this year, that would be helpful, sir.
Vipul Mathur
Yes. As I said different way, our top-line was close to INR600 crores at this point, you know, we may — for the and we don’t. So and this entails EBITDA — this entails business from the water storage tanks and it is completely simulated into our consolidated EBITDA. But I think so I will advise my people to have an offline discussion with you and to give you a little more granular details about this, please. Welcome. Can you please get-in touch and let’s close it out of.
Deepak Lalwani
Thank you.
Vipul Mathur
Thank you, Deepak.
Operator
Thank you. We take the next question from the line of Ankit from Research Private Limited. Please go-ahead.
Ankit
Sir, congratulations on a set of numbers. I have a few questions. What percentage of the production you’re doing in US, right, is dependent on imports of the raw-material?
Vipul Mathur
Right now or the confirmed order book you’re talking
Ankit
Just we can take example of Q4 and talk about it. Whatever pressure what was import?
Vipul Mathur
No, there is no import, zero. It is all domestic steel melt and produced in America and the pipes made in America and pipes supplied in America. So there is nothing which is going to get imported.
Ankit
We are talking about raw-material, right?
Vipul Mathur
Yes, you asked your question was about raw-material only, right?
Ankit
Yes, that’s correct. That’s correct. Okay. Next question is, sir, what percentage of volumes at EBITDA in Q4, right, what was contributed by the production in USA? Can you give some flavor on that?
Vipul Mathur
I don’t think so that will be the right way of looking at things. So we — I always maintained that this is not a company to be monitored on a — it’s a project-based company. It has nothing to be monitored on a month-on-month basis, quarter-on-quarter basis. The quarter revenues and the quarter EBITDAs are the factor of your product mix. What are you producing at this point that point in time There it is a blend of some hype, very, very profitable orders versus some low marginal contribution orders, some medium profitability order. So I don’t think so that will be the right way of looking at things. I think so we should be focusing more on a quarter basis and more on a half yearly basis and take my word on the guidance side of it please for the yearly guidance side of it. And it will be very difficult to talk on a month-on-month basis.
Ankit
Sure. One last question is, sir, I see that you have export demand increasing in-markets like Saudi Arabia and Qatar as well. The marketplace do you see as a one-time trend or you see the long-term trend for Qatar.
Vipul Mathur
Yeah. And which product are you talking, Ankit? Please understand Welspun is now a conglomerate. You know, for me, markets are for, the market is for me for SS piles, the market is for me for DI piles. The market is only for OPVC pipe. So help me understand, clarify which particular segment of the business you were asking for?
Ankit
Pipe.
Vipul Mathur
Yes. So on the LSO pipe, I think so Qatar, if you look at their potential and if you look at the — their roadmap, I think so they have very clearly a roadmap for the next 10 years that what is their gas potential at this point in time and where do they want to reach? I think so, it’s the long-term 10-year investment plan they have put up on the table. And I see — I believe that this demand for the Qatar will be there on a sustained basis. That’s my very strong understanding of the whole subject.
Ankit
Okay. Thank you, sir.
Vipul Mathur
Thank you, okay.
Operator
Thank you. Ladies and gentlemen, due to time constraint, that was the last question. I now hand the conference over to the management for their closing comments.
Vipul Mathur
Thank you. So once again, thank you, gentlemen for joining us for this call today. I hope that we would have been able to bring almost full clarity on the — and transparency on the subject matter. And this is at Wilspun, this is one of our core values, which we believe in that you are our partners and we have to be absolutely fair and transparent to them. I think so we are living up to your expectation.
But having said that, if you still have any further queries, any other questions, please feel free-to reach-out to the CFO, to our IR team and they will be more than happy to assist you. On — just to conclude, I just wanted to give you the assurance and the comfort that this company is now poised to sort of — it’s going to a different league, a different orbit. The Welspun Corp is now going to be at — we are — it’s a new normal for Welspun Corp, which is which we have seen emerging over a period of time.
Hereon, when we will end-up this clear, by that time you will have two new facilities which would have come up on-stream and we would see their earnings and their EBITDA also coming up into our play. So the next three to five years, we are building this organization from one label to another and it is a very exciting journey and gentlemen, your trust and your confidence in us will help us to scale new heights.
I thank you very much for joining for joining me today and thank you very much.
Operator
Thank you. On behalf of JM Financial Institutional Securities Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.