Welspun Corp rallies over 12 percent after bagging onshore pipleline project

Shares of pipemaker Welspun Corp surged over 12 per cent in today's session after the company said in a regulatory filing that it had bagged an order for supply of 2.16 lakh metric tonnes (MT's) line pipes for an onshore project in the US.With the addition of this order companies current order book stands at 10.4 lakh metric tonnes (MT's) worth Rs 6400 crores.Revenue recognition from this order will start next year.

According to the companies management even after a global meltdown in energy prices and related slowdown in many new project spending, the company was finding opportunities globally especially in America and few other markets which has enabled the company to have a  healthy order book position.

Welspun Corp major supplies are for the Middle East and North Africa region and the Americas. 

Tracking this development the stock rallied more then 12 percent in early trade to touch a high of Rs 110.25. The stock is still down 28 percent from its 52-week high touched in August 2015. Of late companies stock has been moving in a range but this news is likely to move the stock higher in the coming future.Performance wise companies Q2 results saw a overall improvement in the business with revenue rising by 4.4 percent Y-O-Y from Rs 2398.05 crores to Rs 2503.28 crores. Even after a sluggish energy prices company was able to increase its revenues.

Operationally too company saw a marked improvement as EBITDA grew 65 percent Y-O-Y from Rs 185.09 crores to Rs 306.34. Margins grew by 450 basis point. It was achived by the company mainly due to cost optimisation techniques adopted by the company.Profits jumped multi fold mainly on account of tax element.Even after excluding the tax part the company saw its profit grow strongly by 200 percent.

Going forward company sees the good opportunities in domestic markets too a with governments ambitious plan  to build about 15,000 km  of Oil & Gas pipelines.Plus with mega unbanisation plans of state governments of Telangana ,Andhra Pradesh and Gujarat also likely to give boost to the domestic pipes business where the company has a strong position.

Coming future the company will also be aided by its well-diversified regional presence by way of order wins in various geographies.

The promoters holding in the company stood at 40.85 per cent while institutions and non-institutions held 13.83 per cent and 36.56 per cent respectively.