Welspun Corp shares rise on $1.8bn US pipe order, but concerns linger over sustainability

The market reaction was sharp, with market capitalisation rising by nearly 50% of the order value, a move some analysts view as disproportionate to the incremental gains. Financial benefits from the order are expected to materialise only during FY28 and FY29, as execution will span those years.

Management indicated on a post-order conference call that EBITDA margins in the US business could range from $250 to $300 per tonne. However, the order is non-recurring, and Welspun must secure similar wins, particularly from the US, to maintain revenue visibility beyond FY29.

The US currently contributes 60–65% of the order book, but future demand faces risks from potential shifts in US energy policy after the 2028 elections, especially if a new administration prioritises renewables over fossil fuels. Additionally, fluctuating crude and natural gas prices—affected by global events such as the West Asia conflict—could impact drilling activity and pipeline demand.

Although Welspun believes US import tariffs under Section 232 will remain supportive of domestic manufacturing, their long-term stability is uncertain. The company is expanding its US plant capacity to meet local demand, as importing pipes from India is not viable due to tariffs.

For FY27, Welspun has guided for revenue of ₹20,000 crore and EBITDA of ₹2,850 crore. With a current market capitalisation of ₹62,500 crore and cash of ₹2,300 crore as of Q1FY27, the enterprise value stands at ₹60,200 crore, implying an EV/EBITDA multiple of 21 based on guided earnings—valuations that are not considered low.

Management has suggested that doubling FY27 EBITDA by FY30 is possible if all business segments perform strongly, which would require a CAGR of nearly 30% from FY27 onward—well above the 15% CAGR achieved over the past two years to FY26.