India's Welspun posts steep Q2 profit drop on low domestic steel bar demand

Welspun

08/11/2024 11:48

Nov 8 (Reuters) - India's Welspun Corp  WGSR.NS  reported a 25% drop in second-quarter profit on Friday, due to
sluggish domestic demand for its steel bars amid a slowdown in construction activity.
    The company, which makes which makes pipes to move oil, natural gas, and bars for infrastructure, said its
consolidated net profit fell 25% to 2.87 billion rupees ($34 million) for the three months ended Sept. 30. 
    Its revenue from operations slid 19% to 33.02 billion rupees during the quarter. 
    For further earnings highlights, (click here)
    
    KEY CONTEXT
    Welspun saw tepid domestic demand for steel bars in the quarter due to above-average rainfall and a slowdown in
construction activity, despite improved demand for its steel pipes exports from the U.S. and the Middle East. Steel
pipes and tubes are the company's key products.
    Demand for its steel bars is expected to pick up from the fourth quarter of the current fiscal year, Welspun said
in a statement.
    Peer Jindal SAW  JIND.NS  reported a rise in Q2 profit as a result of higher demand for its pipes in its key Middle
East and North Africa (MENA) markets.
    
    PEER COMPARISON 
   
                                 Valuation (next 12     Estimates (next 12    Analysts' sentiment              
                                 months)                months)                                                
                      RIC        PE     EV/EBITDA       Revenue     Profit    Mean     No. of   Stock to       Div
                                                        growth      growth    rating*  analyst  price          yield
                                                                                       s        target**       (%)
 Welspun Corp          WGSR.NS   17.87  10.70           10.07       -2.87     Buy      3        1.08           0.67
 Jindal SAW            JIND.NS   10.61  7.08            3.44        4.80      Strong   2        0.85           0.61
                                                                              Buy                              
 APL Apollo Tubes      APLA.NS   41.34  26.22           20.27       38.95     Buy      13       0.93           0.36
 Ratnamani Metals      RMT.NS    32.49  23.21           15.30       22.39     Buy      3        0.94           0.38
 and Tubes                                                                                                     
 * The mean of analyst ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell
** The ratio of the stock's last close to analysts' mean price target; a ratio above 1 means the stock is trading above
the PT

  JULY-SEPTEMBER STOCK PERFORMANCE 
    
    
-- All data from LSEG IBES
-- $1 = 84.3450 Indian rupees

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 (Reporting by Manvi Pant in Bengaluru; Editing by Abinaya Vijayaraghavan)
 ((Manvi.Pant@thomsonreuters.com; +918447554364;))