Welspun Corp: Axis Securities’ ‘Punch’ Stock Analyzed
Axis Securities has identified Welspun Corp as a top investment opportunity, nicknamed ‘Axis Punch.’ The brokerage recommends buying the stock, predicting it will reach ₹875. Their reasoning centers on several key strengths within the company. This analysis focuses on the factors driving this positive outlook.
Key Points
- Strong order book: ₹23,500 crore for 2+ years.
- US demand boosted by LNG and data centers.
- Saudi Arabia gains from Vision 2030 investments.
- Strategic expansion in US and Saudi markets.
- Company finances strong: Capex funded by savings.
- High profitability: ROCE consistently above 20%.
Welspun Corp’s biggest advantage is its huge order book, currently standing at approximately ₹23,500 crore. This provides the company with clear revenue projections for the next two years, primarily in the United States, and at least one year in other countries. This significant order volume provides a solid foundation for future growth.
A large portion of this order book, about 1.3 million tonnes, is for line pipe, evenly split between India and the US (600 kt each). The Ductile Iron (DI) pipe order book is even larger at 355 kt. The US order book is particularly promising, with bookings secured until FY28 for a substantial $715 million.
The company’s success in the US is fueled by a growing demand for natural gas (LNG) and the increasing need for power to support data centers. Welspun Corp is proactively responding by expanding its manufacturing capabilities in Little Rock, Arkansas, specifically increasing its production of Longitudinal Submerged Arc Welded (LSAW) and High-Frequency Induction Welded (HFIW) pipes – technologies crucial for these projects. This ensures they can meet the future demand.
Beyond the United States, Welspun Corp is actively pursuing opportunities in Saudi Arabia, aligning with the country’s ambitious Vision 2030 plan. They’ve established partnerships through their associate EPIC and built entirely new factories for making line pipe and DI pipe, specifically targeting Saudi Aramco’s massive capital spending ($10 billion annually) and large-scale water infrastructure projects.
To finance its expansion, Welspun Corp is investing approximately ₹5,500 crore over the next three years. Most of this spending will be covered by money the company is already making and saving. Despite this major investment, the company still holds a cash reserve of ₹11 crore as of the first half of FY26, demonstrating smart financial management and efficient cash generation.
Management is confident in its financial goals, predicting an EBITDA of ₹2,200 crore by FY26. They’ve consistently achieved strong profitability, with a Return on Capital Employed (ROCE) of around 24% in the first half of FY26. The company aims to keep this ROCE above 20% even as it invests in new factories.
“A strong order book and disciplined spending provide a confident outlook for Welspun Corp’s future growth.”
