Welspun Corp stock drops 8% on lower-than-expected FY25 guidance

Shares of Welspun Corp dropped by 8 percent in intra-day trading on Friday following the release of the company's March quarter (Q4FY24) results and its guidance for the financial year 2025, which did not meet market expectations.

Welspun Corp reported a 19.7 percent year-on-year (YoY) increase in he net profit, reaching ₹287.3 crore for the fourth quarter ending March 31, 2024, compared to ₹240.1 crore in the same quarter of FY23, according to a regulatory filing. The company's revenue from operations grew by 9.6 percent to ₹4,461.2 crore, up from ₹4,070.2 crore in the corresponding period last year.

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Expenses for the last quarter of FY24 were ₹4,292.37 crore, compared to ₹3,835.55 crore in the same quarter the previous year. At the operating level, EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) decreased by 21.9 percent to ₹330.2 crore in Q4 FY24, down from ₹420.5 crore in Q4 FY23. The EBITDA margin fell to 7.4 percent from 10.3 percent in the corresponding period the previous fiscal year.

For the new financial year, Welspun Corp expects a revenue of ₹17,000 crore, which is 3.3 percent lower than the ₹17,582 crore reported for FY24. The company also anticipates a decline in EBITDA to ₹1,700 crore, down from ₹1,804 crore in FY24. However, Welspun Corp expects its Return on Capital Employed (RoCE) to remain steady at 20 percent for FY25, the same as it was in FY24.

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The stock declined as much as 8.5 percent to its day's low of ₹550.20. The stock is now almost 14 percent away from its 52-week high of ₹636.95, hit on May 21, 2024. Meanwhile, it is still trading 117.5 percent higher than its 52-week low of ₹252.95, hit on June 1, 2023. The scrip has surged 139 percent in the last one year and been completely flat in 2024 YTD.

At the end of the financial year 2024, Welspun Corp's Line Pipes business had an order book valued at ₹6,100 crore, the DI Pipes business had an order book worth ₹2,741 crore, and the SS Bar & Pipes business had an order book totaling ₹215 crore.

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The board has recommended a dividend at a rate of 6 percent per share ( ₹0.60) on the 35,15,11,571 cumulative redeemable preference shares of ₹10 each, fully paid up, totaling ₹3,51,51,15,710, effective from April 1, 2023, to September 18, 2023, the date of redemption. Additionally, the board recommended an equity dividend at the rate of 100 percent ( ₹5 per share) on 261,666,895 fully paid-up equity shares of ₹5 each, aggregating to ₹1,308,33,475.

The board also approved the sale of 19 percent of equity shares of Welspun Global Services Limited (WGSL) and Welspun Transformation Services Limited (WTSL) held by the company to Aryabhat Vyapar Private Limited, which is part of the company's promoter group.

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Welspun Corp Ltd (WCL), the flagship firm of the Welspun Group, is one of the largest manufacturers of large-diameter pipes globally, with a presence across six continents and 50 countries.