Stellar Performance
On a Y-o-Y basis comparison the Operating Profit Margin (OPM) increased by 400 basis points to 16.8%. A 25% growth in realization along with higher utilization levels aided the expansion in margins. The resultant operating profit for the quarter ended Dec'07 stood at Rs 174.10 crore which was 83% higher when compared to the corresponding previous quarter last year. The ensuing PAT for the quarter ended Dec'07 was Rs 97.40 crore which was higher by 136% as compared to corresponding period last year. Currently the company has a strong order book of Rs 4488.9 crore (US$1.1 billion), which is one of the highest in the Industry.
Quarterly Analysis
For the quarter ended Dec'07 WGSRL reported a 39% increase in net sales revenue to Rs 1036.40 crore. The Operating Profit Margin (OPM) increased by 400 basis points to 16.8%. The resultant operating profit for the quarter ended Dec'07 stood at Rs 174.10 crore which was 83% higher when compared to the corresponding previous quarter last year.
The raw material cost and staff cost decreased (as % of sales net of stock adjustment) from 76.3% to 64.0% and from 2.0% to 1.8% respectively. The other expenditure increased (as % of sales net of stock adjustment) from 9.5% to 17.3%. The other expenditure of the company grew by 142.4% primarily on account of rise in freight expenses on higher exports revenue.
For the quarter ended Dec'07 the other income of the company increased by 340% to Rs 2.20 crore. The ensuing PBIDT for the quarter ended Dec'07 stood at Rs 176.30 crore which was 84% higher as compared to the corresponding previous quarter last year. The Interest/Finance charges for the quarter ended Dec'07 was Rs 14.30 crore which was 26% lower as compared with the corresponding previous quarter last year, while the depreciation charges for the quarter ended Dec'07 stood at Rs 14.50 crore which was 19% higher as compared with corresponding previous quarter last year.
The ensuing PBT for the quarter ended Dec'07 stood at Rs 147.50 crore which was 129% higher as compared to the quarter ended Dec'06. Provision before taxation (including Current, Deferred and Fringe Benefit tax) for the quarter ended Dec'07 stood Rs 50.10 crore resulting in a PAT of Rs 97.40 crore as compared to Rs 41.20 crore in corresponding previous quarter last year indicating a rise of 136%.
Nine months ended
For the nine months ended Dec'07 WGSRL reported a 42% increase in net sales revenue to Rs 2767.00 crore. The Operating Profit Margin (OPM) increased by 420 basis points to 16.7%. The resultant operating profit for the nine months ended Dec'07 stood at Rs 460.80 crore which was 90% higher when compared to the corresponding period last year.
The raw material cost and staff cost decreased (as % of sales net of stock adjustment) from 74.8% to 68.2% and from 2.2% to 1.8% respectively. The other expenditure increased (as % of sales net of stock adjustment) from 10.9% to 14.3%.
For the nine months ended Dec'07 the other income of the company increased by 177% to Rs 3.60 crore. The ensuing PBIDT for the nine months ended Dec'07 stood at Rs 464.40 crore which was 91% higher as compared to the corresponding previous quarter last year. The Interest/Finance charges for the nine months ended Dec'07 was Rs 45.40 crore which was 14% lower as compared with the corresponding previous quarter last year, while the depreciation charges for the nine months ended Dec'07 stood at Rs 39.20 crore which was 11% higher as compared with corresponding period last year.
The ensuing PBT for the nine months ended Dec'07 stood at Rs 379.80 crore which was 145% higher as compared to corresponding period last year. Provision before taxation (including Current, Deferred and Fringe Benefit tax) for the nine months ended Dec'07 stood Rs 130.50 crore resulting in a PAT of Rs 249.30 crore as compared to Rs 101.10 crore in corresponding period last year indicating a rise of 147%.
Order Book:
Welspun rated amongst the top 3 SAW Pipe companies in the world by CLSA Asia Pacific Markets (July 2007) enjoys order book position of Rs 4488.9 crore ($1.1 billion), one of the highest in the Industry.
Projects Status:
Pipe
LSAW Pipe capacity of 300,000 tons at Anjar SEZ (Welspun got permission for Engineering SEZ), Gujarat, India and 150,000 tons of HSAW capacity in Anjar, are progressing as per schedule. Similarly, the implementation of 300,000 tonne project in Little Rock, Arkansas, is going as per schedule and the facility is expected to be commissioned by Sept 2008. Post completion of all the U.S. and Indian projects by March 2009, Welspun capacities will reach 1.75 MTPA, making it one of the largest line pipe companies in the world.
Plates and Coil Mill
In Sept' 07, Welspun had started trial production of its Plate-cum-Coil Mill by producing India's widest plate of 4.5 meters, This 1.5 MTPA facility is now being stabilized.
Management Comment
On the back of robust performance B.K. Goenka, VC & MD said, "The first nine month of the year has been outstanding, we not only achieved excellent financial results but also sowed seeds for our future growth by bagging prestigious orders and embarking new capacity additions. We strongly believe that we are poised to become one of the biggest and most respected one-stop-solution providers for steel pipes in the World."
Echoing his comments, Braja Mishra, CEO, Welspun said, "We are growing at a rapid pace. In our aggressive growth phase, we have ensured that we remain focused, adhere to 'Engineering Excellence' and continue to delight our customers with flawless product quality and timely delivery schedules".
The scrip is currently trading around Rs 530.55
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