Up 225% in 10 months! Why brokerages see more steam left in this multibagger stock

Shares of Welspun Corp Ltd have delivered multibagger returns to investors in the last one year. The stock has gained more than 225 per cent in just a little more than 10 months from its 52-week low at Rs 177.85 on February 27, 2023. The stock touched its 52-week high at Rs 579.40 in the beginning of this year.

Welspun Corp shares inched up to Rs 562.85 on Monday, commanding a total market capitalization of close to Rs 15,000 crore. The stock has swelled around 10 times from its covid-19 lows, while it is up 85 per cent in the last six months period. Brokerage firms continue to see more upside in the stock considering the recent acquisition and capex plans.

Welspun Corp is a one-stop service provider offering end-to-end pipe solutions ranging from 1.5 inches to 143 inches. Their ever-expanding goals and targets have helped them establish a global footprint with stellar results in the line pipes business, based across six continents and fifty countries.

Synonymous with exceptional quality and an impeccable execution track record, their technological expertise and innovation are top-notch, said Anand Rathi in its IC report on the stock. "Their line pipe capabilities include HFW (high-frequency welded), HFIW (high-frequency induction welded), HSAW (horizontal submerged arc welded), and LSAW (longitudinal submerged arc 2elded)."

Welspun Corp is strategically positioned to benefit from various sectoral tailwinds and government initiatives across its key geographies and business segments. The company has secured a third-quarter order book in this segment and their marketing approach to their innovative digital channel to address the B2C segment has been paying off, said the brokerage.

The company also acquired ABG Shipyard, which came with 150,000 tons of steel scrap, 165 acres of leased land with 1,000 meters of sea frontage. Welspun Corp expects to recover a large amount of acquisition cost with sale of scraps. The company also plans to monetize the land area in the future, said Anand Rathi.

Welspun Corp is expected to post a significant improvement in financial operations during FY23-25 with revenue and Ebitda CAGR expected at 33 per cent and 80 per cent, said the brokerage. "Company has reduced its net debt position and aims to be net debt free in the coming years," it added while initiating coverage on the stock with a ‘buy’ and a target price of Rs 700.

Welspun Corp recently bagged an order for new line pipes in India and USA. and with this the company's cumulative orders received since its last disclosure have crossed 150 KMT valued at Rs 1,500 crore. The new orders also include a Gas Pipeline order in the USA. These orders will be executed in FY24 and FY25, said the company in the exchange on Thursday.

Following the order win, Arihant Capital Markets continue to remain positive on Welspun Corp but the brokerage will revisit numbers post Q3FY24 results. "We will get more updates on Sintex business post Q3 results. The company trades 7.4 times FY 26 EV/EBITDA," it said.

Along with orders in the line pipe business, there has been significant progress on capex in Sintex Plastics as well. Company is investing to set up manufacturing units in the state of Telangana and Odisha. Along with the water tanks business, the company is foraying into PVC pipes business, Arihant Capital added.

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.

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