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Operator: Ladies and gentlemen, good day and welcome to the Welspun Corp Q2 and H1 FY 2027 Earnings conference call. As a reminder, all participant lines will be in a listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Shailesh Raja from 360 ONE Capital Market Private Limited. Thank you, and over to you, sir.
Shailesh Raja: Yeah, thank you, Steve, and welcome, everyone. We thank the Welspun Corp team for giving 360 ONE Capital the opportunity to host this interaction today. I would now like to invite Mr. Gautam, Head of Investor Relations at Welspun Corp, to introduce the management team. Over to you, Gautam.
Goutam Chakraborty: Thank you, Shailesh, and good afternoon to everyone. Welcome to our Q2 and H1 FY27 earnings call. On this forum today, we have Mr. Vipul Mathur, Managing Director and CEO, Mr. Percy Birdy, Chief Financial Officer, Mr. Yashovardhan Agarwal, Director, Sintex, and Mr. Harsh Rungta, Head Group Investor Relations. Before starting the call, you all must have gone through the results and the investor presentation of the company, which are also available on the stock exchanges and on our website as well. During the discussion, we may be making some references to this presentation, so I request you to please refer to the safe harbor statement, which is there in our presentation. Before the opening remarks, let me just inform you that Mr. Mathur is a little under weather and is not having a good throat.
Goutam Chakraborty: So, we'll start the forum with the opening remarks by Mr. Birdy, and post that, we'll open the floor for the Q&A. With that, let me hand over the floor to Mr. Birdy. Over to you, sir.
Percy Birdy: Thank you, Gautam. Good afternoon, everyone. Let me first welcome you all on this forum to discuss our Q2 and H1 FY27 performance. As Gautam mentioned, I'm sure you all had a chance to go through our results and the detailed investor deck that we published on the exchanges and also on our website. Therefore, I would like to highlight only some of the key aspects in my opening remarks, and after that, we can have more time for an interactive session. We delivered yet another robust quarter. Our Q2 FY27 EBITDA stood at a record all-time high of INR 782 crore, registering 25% year-on-year growth. Our half-yearly EBITDA rose 30% YoY to INR 1,538 crore, again an all-time high. This compares favorably with our annual guidance of INR 2,850 crore EBITDA.
Percy Birdy: Our annualized ROCE, return on capital employed, for H1 FY27 stood at 22.7%, well above our guidance of more than 20% for FY27. Our net debt cash position also improved further to a net cash of INR 3,887 crore. This is after having incurred CapEx of approximately INR 1,500 crore for H1 of FY27. As you know, our order book stands at an all-time record high of approximately INR 50,000 crore, roughly $5.2 billion. This provides strong growth visibility and underscores our expanding footprint in the global pipeline market. Before touching upon the business environment, I'm pleased to inform you that the board has approved three key investment projects. De-bottlenecking and capacity augmentation of our spiral pipe capacity in the US by 225,000 metric tons per annum at a CapEx of up to $115 million. This is expected to be ready by March 2028.
Percy Birdy: Setting up of a greenfield spiral pipe plant along with a coating facility in Jordan under a 50/50 JV with Perma-Pipe at a total project CapEx of up to $125 million to be shared with the partner. We are going ahead with this investment on the basis of firm MOU with the developers of Jordan's National Water Carrier Project and the government of the Hashemite Kingdom of Jordan to advance the development of pipe manufacturing and advanced coating facilities in Jordan. The proposed facilities will be capable of serving major water, oil and gas, energy, and infrastructure projects in the kingdom, and also across surrounding regional markets due to Jordan's strategic location. We are also setting up a joint venture in India for internal FBE, fusion-bonded epoxy coating capability in an equal partnership with Perma-Pipe.
Percy Birdy: This will give us the complete bouquet of pipe coating services, which will enable us to go after large pipe export orders where IFBE coating is mandatory. Let me discuss the business environment. As far as US market is concerned, demand continues to remain robust. The medium to long-term outlook continues to be supported by growth in LNG exports, rising electricity requirements from AI data centers, triggering the demand for new gas pipelines for captive gas turbine power plants, and investment across onshore and offshore oil pipeline infrastructure. We are currently booked through FY29 in the US. In the KSA market, ongoing investments in oil and gas and water infrastructure are expected to support pipeline demand. The region's evolving energy security and infrastructure priorities may also create opportunities. Also, the potential for reconstruction in the Middle East region once the geopolitical situation stabilizes.
Percy Birdy: In the short term, the supply chain, logistics, and freight costs in the region have been adversely impacted. Coming to India, the domestic demand continues to remain muted. The domestic water market remains under stress, though there have been some optimism around river interlinking projects and interstate water sharing agreements. However, the central government budgetary constraints need to get lifted for orders to get awarded. On the domestic oil and gas segment, we see a lot of potential going ahead in Samudra Manthan, in deep water exploration, in PNG connections, and refinery projects. However, we are yet to see the orders inflow. Exports from India, of course, continues to be the bright spot, and we continue to focus there, where we see good demand coming from the Middle East, Southeast Asia, and LATAM.
Percy Birdy: In this context, let me reiterate that our diversified global presence spread across USA, Saudi, India, and in future, Jordan as well, this helps us in mitigating challenges in a particular geography. Moving ahead to Welspun Specialty Solutions Limited, WSSL. While higher freight costs and the tariff regulations impacted exports to Europe adversely in this quarter, WSSL continues to focus on domestic power gen, thermal, nuclear, defense, aerospace, oil and gas, and petrochemical sectors, which are the high-value-added segments for stainless steel bars and seamless pipes. Coming to Sintex, we continue to focus on channel expansion. In water storage tanks, we focus on premiumization alongside sustained momentum, economy segment growth led by urbanization in the tier 2 cities. In plastic pipes, we have extended footprint to 15 states and continue to focus on product portfolio expansion and brand visibility.
Percy Birdy: We remain focused on our core products and geographies, prudent capital allocation, maintaining strong supplier-customer relationships, innovation, and building capabilities across our organization. Our people remain integral to our growth strategy, while our sustainability agenda continues to guide responsible manufacturing and long-term value creation. With that, let me ask the moderator to open the floor for the question-and-answer session.
Operator: Thank you, sir. We will now begin with the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handset while asking the question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Shaurya Shah with Equirus Securities. Please go ahead.
Shaurya Shah: Yeah. Thank you for taking my question. The first thing that I want to ask about is on the US business. So, of course, the oil and gas front, a large part of order booking has played out.
Operator: Shaurya Shah, your line has been unmuted. Please go ahead with your question.
Shaurya Shah: Yeah. Hello, am I audible? Hello?
Operator: As there is no response, we will move on to the next question. It is the line of Vikas Singh with ICICI Securities. Please go ahead.
Vikash Singh: Good afternoon, everyone. Congratulations, sir, on a very good set of numbers. My first question pertains to US business that, like we said, that we have booked till FY29, while the narrative on the data center and required pipelines still stays strong. Just wanted to understand, are we still in a position or the customers are looking beyond FY29 to give you more orders? How should we look at the order built up in that particular geography?
Vipul Mathur: Vikas, good morning.
Vikash Singh: Good morning, sir.
Vipul Mathur: See, the pipeline of the orders or the pipeline of the projects still looks fairly robust at this point in time. However, everyone now understands that ordering has to be slightly calibrated because looking at the capacities, looking at all the orders which have recently been awarded, we are seeing a lot more calibration happening. That does not mean that the pipeline, robustness of the pipeline is standing compromised, but it is a very good intelligent thinking which is now coming in slightly, where the calibration is happening. We will see that, as we speak, there are a couple of projects which are still under discussion, which will still get finalized in the next couple of quarters. But the intensity at which they were all getting finalized till now, I think so that intensity will slightly come down, and very rightfully so, it should happen that way.
Vipul Mathur: We continue to stay very optimistic, positive about the robustness of the US business. I have a strong feeling that this demand is going to sustain for next 3 to 5 years more over and above FY2029. That's the sort of guide, that's the sort of visibility we are getting at this point in time. But it will now come in a little calibrated.
Vikash Singh: Noted, sir. Sir, my second question pertains to our Saudi mill as well as Jordan, which we are going to set up. In terms of fungibility, if US demand remains extraordinarily high for a longer than expected term, is this capacity, especially the Saudi, which would come earlier, would have a fungibility to US, or that we should not think at this point of time?
Vipul Mathur: Technically speaking, that fungibility do exist. There's no doubt about it. But the fact of the matter remains that the Saudi market itself would be so very buoyant. We are so very optimistic around and about the robustness of that particular market that I think so our first priority would be to cater to the Saudi market. I am not discounting the possibility of addressing the North American market. I'm not saying that it's just the US market. I am not discounting the possibility of addressing the North American market out of Saudi, which is a possibility. But I have a strong reason to believe that Saudi itself is going to keep us busy, one. Coming back to your Jordan part of it, Jordan is a very, very strategic decision we have taken. Again, a call we have taken.
Vipul Mathur: This was a similar question when we have taken preemptive calls in America or in Saudi, right? I think so keeping that spirit in mind, we have taken a call in Jordan because we have strong reasons to believe that in times to come, there is going to be a massive reconstruction activity which is going to get kickstarted in that particular region. Jordan being at the epicenter of all the reconstruction activity, which happens to be in Syria, which happens to be in Iraq, which happens to be in Lebanon, which also happens to be in Jordan itself, there are massive projects which are going to happen in Jordan itself. I think so we have a strong view that this strategic investment is going to pay a huge dividend to us in times to come.
Vikash Singh: Noted, sir. I resonate with you on the reconstruction opportunity. Just one last question. We are flooded with cash. Even if I add up all these CapExes, we will still be adding cash over and above this CapEx. Just wanted to understand how the management looks for this cash utilization, because this will weigh on your ROE balance.
Vipul Mathur: Right. Because as we have been very careful about our capital allocation policy, I have clearly articulated our positioning that what is our directive from the board, that how the capital allocation has to happen. First and foremost, I want to once again want to reassure you that we will have a very disciplined capital allocation policy, number 1. Number 2, it is also a fact that the current businesses are generating sufficient operating cash flows at this point in time, and we would be absolutely in positive of cash. The deployment of cash, A, primarily would be for 2 reasons. A, for growth, and B, to our shareholders. That is what our directions, what we have from the board.
Vipul Mathur: As at this point in time, what percentage, what is going to happen, how it is going to happen, it is a little premature because first and foremost, let the cash come to the bank. Right now, it is only on the paper. It has to come to the bank. But I am only reassuring that, A, the capital allocation part of it is going to be extremely judicious, and B, it will only be focused toward growth, and it will be for our shareholders. Hello?
[Company Representative] (Welspun Corp): Hello?
Operator: Yes, sir. The current participant has been disconnected. We will move on to the next question. It is on the line of Bhavya Gandhi with Bajaj Alternates. Please go ahead.
Bhavya Gandhi: Yeah. Hi. Thanks for the opportunity. Hope I am audible. Hello?
Operator: Bhavya Gandhi, your line has been unmuted. Please go ahead with your question.
Bhavya Gandhi: Yeah. Can you hear me? Is it audible? Hello? Hello? Can you hear me?
Operator: Yes.
[Company Representative] (Welspun Corp): Yes.
Bhavya Gandhi: Yeah. Hi. Just wanted to understand what is the bid pipeline looking like, and what is the usual conversion ratio, if you can highlight on that. You said till FY29, you are completely booked, I understand. Post that, in your very high-level experience, usually what is the cycle period when it comes to this oil and gas and water infra? Is it like a long gestation cycle, or is it like a short cycle? If you can just elaborate on that as well.
Vipul Mathur: Bhavya, the bid pipeline in US looks extremely strong at this point in time. The demand robustness is unabated, very strong demand still appearing. We are still seeing a lot of traction with respect to data centers and demand, and of course, for the LNG exports, number 1. And the bid pipeline for the India domestic business is slightly looking weak at this point in time. I am sure that things will improve from here on because the water sector has not been doing good here. We are seeing a little bit of a resurgence in the oil and gas sector. But India export bid pipeline is still looking robust. India export bid pipeline looking good, but India domestic bid pipeline could have been better. It is a little bit of a matter of a concern.
Vipul Mathur: Coming back to the Middle East, where the Saudi domestic demand is looking extremely buoyant. I think the sooner this geopolitical situation gets addressed and becomes a little stable a bit, I think we will see a massive resurgence coming up in the Saudi side of it. From bid pipeline perspective, other than the India part of it, we are fairly robust. We are fairly comfortable and confident.
Bhavya Gandhi: Would you like to quantify the bid pipeline amount, and what is the conversion ratio like?
Vipul Mathur: It is changing. Bhavya, it is very difficult to quantify. Typically, we see that in any case, 3 to 4 million tons of pipelines, in any case, are always there in contention. But today, things are changing so very rapidly and so very fast. There are so many variables which are impacting it, so it is very difficult to pinpoint it. But they still are in the vicinity of almost 2 to 3 million tons of pipeline at any point in time. We are contemplating and contesting for.
Bhavya Gandhi: Got it. And just a high-level question, sir, on the cycle. How long does the cycle last? Because we are adding capacity, although we have visibility for next few years. Post that, just wanted to understand, will the growth taper off post 2030? I know you said you have strong bid pipeline as well, but just wanted to understand how long does the cycle last? Is it like a 5, 7-year cycle, or is it more like a 3, 4-year cycle, from your experience? Yeah, that would be really helpful.
Vipul Mathur: Okay. As I have earlier said in my earlier calls as well, this is a structural change which is happening in the industry. It is not a sort of a cyclical paradigm shift we are seeing here. What we are seeing is a very structural shift happening in the industry at this point in time. I think so, which means that the demand is going to be for a long haul, both in US, both in the Middle East market. I think so it is going to be a long-term sustained demand. What we have a visibility of next 5 to 7 years at this point in time, crystal ball, 3 to 5 years, visibility of 5 to 7 years. And if it is beyond that, I think so it is going to be extremely good for all of us.
Bhavya Gandhi: That's really helpful, sir. Encouraging. Thank you so much. That's it from my end. Wishing you all the best.
Vipul Mathur: Thank you.
Operator: Thank you. The next question comes from the line of Parth with Investec. Please go ahead.
[Analyst] (Investec): Hi, sir. Am I audible?
Vipul Mathur: Yeah, Parth.
[Analyst] (Investec): Hello. Yes, sir. Thank you for the opportunity, sir. First, I wanted to check on Jordan expansion. Sir, what is the capacity we should work with over here in Jordan?
Vipul Mathur: See, we are in the process of finalizing all the capacities and everything, but it is going to be a fairly sizable capacity we will create in Jordan at this point in time, for a simple reason that the requirement in Jordan itself is going to be huge, both with respect to water and oil/gas pipelines. The Jordanian government has already announced that. As Prasoon did mention in the opening remark, we are going against the backdrop of an order in any case. It is not that we are putting up a plant and then scouting for the business. We will have a business before the plant is going to start. It is going to be a sizable capacity, number one. Also, these capacities are mostly because depend on what size and what thicknesses you are doing.
Vipul Mathur: I have a sense that it could be anything between 350,000 tons to half a million ton capacity range. We will be looking at it because the plant what we are looking at will have the capability to do that.
[Analyst] (Investec): Perfect. Sir, just to check on the KSA timelines, we had mentioned December 2026. Is there a delay or because of the geopolitical reason?
Vipul Mathur: No, no. From a commissioning point of view, we are absolutely on track at this point in time, Parth. We are in the final phases of our commissioning, both for our LSAW as well as for the DIP plant. In this Q3, we will be done with that. Now, the order materialization, the business materialization may take some time because of this condition. Today we have to also understand and acknowledge that the whole Middle East region is under a massive supply chain disruption. Sorry. It is under a massive supply chain disruption. This disruption has to ease out a little bit. There has to be the raw material which has to start coming in. You have to have the ability of the finished good being exported or finished good to move out. I think so that disruption is currently in place. It is not impacting us.
Vipul Mathur: It is impacting the region at large. We have to see it in 2 parts. In terms of our readiness, yes, we will be up and running ready by the end of this particular year. But in order to capitalize upon the opportunities and to start really transacting the business, I think so we are also equally watching with caution, as everyone is, that how is the situation evolving and how quickly is this settling down in the Middle East.
[Analyst] (Investec): Got it. And sir, there is this one announcement by Saudi Arab government that they are expanding the East-West pipeline capacity. Would that materialize anytime soon, or would even that would depend on the supply chain?
Vipul Mathur: That is the one which you guys are hearing outside. But when we are there on the ground, we are hearing multiple things. There are a lot of action which is happening there. I think so the Saudi government is very, very clear as to what they intend to do, and they are completely accelerating the whole processes, right? Let be assured that there is no dearth of a business opportunity, both for the oil and gas with Aramco or in the water sector within Saudi. Be absolutely rest assured. It is just the supply chain disruption which is currently bothering us and everyone at large. Once that is being taken care of, I think so there is no dearth of opportunity.
[Analyst] (Investec): Perfect, sir. That answers my question. Thank you so much.
Vipul Mathur: Thank you, Parth.
Operator: Thank you. Ladies and gentlemen, you are requested to limit your questions to two per participant. Thank you. The next question comes from the line of Shaurya Shah with Equirus Securities. Please go ahead.
Shaurya Shah: Hello, sir. Am I audible now?
Percy Birdy: Yeah, we can hear you.
Shaurya Shah: Yeah. So, just on the US business again, there was some issue with my line earlier, so apologies if I repeat the same. So, of course, the oil and gas front, a large part of our booking has played out. Obviously, the outlook still remains positive. But on the data center story front, is there further fuel left given the massive build-out still happening? So, of course, INR 5,500 crores order has been booked, but what is your view on further visibility happening on the data centers front specifically?
Percy Birdy: Sure. So, Shaurya Shah, you are right. There is a lot of action happening there because of the data centers, and obviously they need to have these captive power plants, and you need the gas pipelines for them. One of the recent orders that we won, a large one there, was actually for a data center pipeline. However, there is also a little bit of a moderation that we are witnessing in the last month or so, and which is actually, it fits in very well with our business plans as well. Because if everything materializes simultaneously, then really we also wouldn't have the capacity to convert that into business orders. I think there is still lot of scope for more and more orders for gas pipelines for data centers. But we have seen a little bit of caution emerging there, and which is actually good in our favor.
Vipul Mathur: If I can just add, Shaurya Shah, to your specific requirement of data center, I think this demand has now started building up. There were the discussions which were happening, but this demand has now started trickling in. It is now building up. If you look at it, in the next five to seven years' time, the volume of data center demand could outpace the demand for LNG exports. That is the sense we are getting at this point in time. So, as what Percy Birdy said, that while there is a natural calibration which is happening and which has to happen and which is good, but data center story has started. Earlier, it was only on the books, then onto the drawing board. Now, it is coming to the execution.
Vipul Mathur: This is a stream which is opening up beautifully well, and that is where we see that the demand is going to be there. A long-term sustained demand is going to be there, please.
Shaurya Shah: Understood. That is great to hear, sir. On the Saudi front, I believe there was some implementation of anti-dumping duty as well, which has been finalized on the DI pipe imports in Saudi. What is your view on the positive sentiment now building up further across the DI pipe industry in the Saudi as well as surrounding regions across the MENA region? Because the desalination story is, I believe, playing out across the MENA region. What is your outlook on this front?
Vipul Mathur: We are very optimistic. Today, if you look at it, on the DI side of it, only two-third of the DI requirement of the Saudi, captive requirement of Saudi, was being serviced through imports, right? Now, we are going to be the largest dominant player. It is going to be a sort of an import substitution. We will definitely be first and foremost, the first right of refusal in any case for the local demand will definitely come to Welspun. So, we are optimistic about this DI pipe demand. You are absolutely right that the water and the desalination story across Middle East is gaining traction. You see, our expansion into the Jordan territory is also logical in that direction.
Vipul Mathur: That is also the play which is happening in Jordan, that is the play which is going to happen in Saudi, which is already happening in Saudi, and that is the play which will also happen in other Middle East regions as well.
Shaurya Shah: Understood. Yes, those are the questions from my side. Thank you, and good luck for the future.
Vipul Mathur: Thank you.
Operator: Thank you. The next question comes from the line of Sneha with Nuvama. Please go ahead.
[Analyst] (Nuvama): Hi, sir. Thanks a lot for the opportunity. Just couple of questions from my end. One is in the Saudi front. You said everything is on track, the demand is pretty good. It is just that you are waiting for the line to start operating. In that case, what could be the utilization levels and how they can inch up for 2028 and 2029? Some color there would be helpful.
Vipul Mathur: See, as I said, that the demand both for oil and gas and water is extremely strong. In the very first year of operations, if everything evens out and the whole supply chain and the region gets stabilized, we are looking at a very high percentage of our capacity utilization. We are not going to touch 100% in the very first year. It is not that you press a button and you start doing that. But our ramp-up would be very, very fast. Our stabilization would be very, very fast for two simple reasons. Number one, that A, the demand is there. B, you are on the ground. C, these are the products which is our bread and butter, which we produce every day in day out globally. So, we are absolutely on top of things. What sort of a capacity utilization will happen?
Vipul Mathur: I can say it will be a fairly higher percentage of capacity utilization across both the plants what we are anticipating in the next financial year.
[Analyst] (Nuvama): Just to put a number here, can we put 50%, 60% utilization at least in the first year of operation?
Vipul Mathur: We should at least be aiming for that, if not more.
[Analyst] (Nuvama): Understood. Secondly, while a lot has been spoken on the US and the demand front, how do we see India? India would consequently face 2 years of falling volumes. Of course, there are two troubles that there is no CapEx happening in India. Apart from that, currently even the exports is hit due to geopolitical issues. How do we see the scenario changing, and how do we track that, whether the spending in oil is coming back?
Vipul Mathur: As I said, the India domestic demand has been fairly sluggish. To be personal, I do not want to give a very rosy picture. I think so the way things are appearing, it could be sluggish for the next few quarters as well, especially on the water sector. For the reasons, there are reasons behind it. However, on the oil and gas side of it, I think so, as I said, we are seeing a little bit of an uptick. We are seeing an uptick in the city gas distribution, which are very welcoming signs. We want to see that how they pan out over the next couple of quarters. But overall demand, the domestic demand is going to be under severe stress.
Vipul Mathur: Having said that, the export demand out of India, what we are exporting out of India, I think so that demand was good, is good, and will continue to be good. In few of the markets, you have supply chain issues, but on most of the markets, you do not have it. I think so our focus will continue to be on exports out of India. I am sure that we have a very impressive record around exports all through this year, and we should be able to maintain that momentum.
[Analyst] (Nuvama): All the best. All the best, team, and thanks a lot.
Vipul Mathur: Thank you too.
Operator: Thank you. The next question comes from the line of Netra Deshpande with Mirae Asset Sharekhan. Please go ahead.
Netra Deshpande: Thank you for the opportunity, and congratulations for the great set of numbers, sir.
Percy Birdy: Thank you, Netra.
Netra Deshpande: Yeah. My first question is pertaining to the line pipes, the volume, which has fallen around more than 22%, and DI pipes. What is the volume guidance for FY27? Again, I will come up. This is my first question.
Percy Birdy: Yeah. So, Netra, the domestic DI pipes market, we all know, is facing, what should I say, headwinds. All the players are getting impacted. There is a slowdown, Jal Jeevan Mission, budgetary allocation. We all know these stories. Welspun's strategy is slightly unique. We are focusing more now on the DI exports, and we have done a lot of work there. Especially to markets like Europe, even in the Middle East, a lot of work has been done, accreditations have been obtained, and we will see that a lot of our production will start going towards exports. Also, in the meantime, pig has been doing well for us, and that is where we are not so adversely impacted by all these things. Things could have been better, no doubt, but I think we are reasonably okay in terms of this particular segment.
Netra Deshpande: Okay. So, volume trends, which we can keep it as the same for the users. FY27, it could be just that.
Percy Birdy: Domestic DI volumes will be obviously substantially lower, no doubt about it. But our focus is now moving to exports of DI pipes.
Netra Deshpande: Okay. Got it. My second question is about the new India JV, which is about the Perma-Pipe. That is a coating segment. What would be this product mix overall structure and margins and realization, or incremental margins or realizations that you are expecting for?
Percy Birdy: The India JV with Perma-Pipe is a very niche JV. It is for internal FBE coating. The investments that we are talking about is not anything that great. I mean, its total project we are talking is about INR 110 crores, and both the partners will fund it. We are talking about a small investment. But it will give us the bouquet of coating services capabilities. That means we can do any type of coating which a potential customer may be requiring, including concrete weight coating, for example, which we already have. This opens up opportunities for export orders, large export orders, where even the bare pipe manufacturing will come to us, because sometimes in these orders, there is IFBE coating is mandatory. While this JV gives only the niche capability of IFBE coating, the benefits to us will be much more than that.
Netra Deshpande: Okay. Where the plant is located? Around like Punjab or any other location?
Percy Birdy: Yes. Punjab, yes.
Netra Deshpande: Punjab, okay. What is the timeline for this commissioning? I mean, when will it start contributing the revenue?
Percy Birdy: I think next financial year, it should be up and running.
Netra Deshpande: Okay. Okay. Sir, the last question about the CapEx commitment for FY27, about this new plant and Jordan JV equity. What will be the debt funded? What would be the net debt-to-EBITDA? Is it still below one, or how will it be? Can you give some insights?
Percy Birdy: Netra, you already know our numbers. The consolidated net cash that we have is close to INR 3,800 crores, okay? While we do have some CapEx remaining in Saudi and in USA, and we have also announced these three new investments, we are reasonably sure that we will continue to remain in net cash position, even after completion of all these CapEx.
Netra Deshpande: Okay. Thank you. All the best, sir. Thanks, sir.
Operator: Thank you. The next question comes from the line of Ritesh Shah with Investec India. Please go ahead.
Ritesh Shah: Hi, sir. Thank you for the opportunity, and congratulations for wonderful results. Sir, just wanted to understand, why is the supply curve not reacting to the demand that we are looking in the marketplace? We do understand that there are entry barriers which are very genuine, approvals take time. But you have several companies operating in North America as well as Middle East. Are there any incremental announcements that you are hearing from a supply curve standpoint?
Percy Birdy: I think your question is more focused on North America, Ritesh.
Ritesh Shah: Yeah
Percy Birdy: we compete with two, three players there, and Welspun in USA is, of course, the largest market share over there. The other players are also a little bit of doing de-bottlenecking and a little bit of capacity augmentation. I think our market share is likely to increase as we go forward. With our capacity expansions that we have announced, we really stand to gain. The competitors are also doing a little bit, but nothing comparable to us. I think we are on a stronger wicket, and there are specific advantages that we have. Our complex in USA, in Little Rock, is spread over almost 800 acres of land, and that gives us a lot of advantages. The storage facilities and the infrastructure that is there, the proximity to the port, transportation, logistics, railway lines.
Percy Birdy: Some of these things are not really available with the competitors. Even if they were to do all these things, it will take them longer time, probably larger investment, and that is probably the reason that Welspun is able to move fast because of this infrastructure setup which we already have there.
Ritesh Shah: Sure. This is helpful. My second question is, I think in one of the earlier comments, Mathurji used the word calibrated. Just wanted to understand, and I think this question was with respect to visibility of FY29, FY30. Just wanted to understand why the use of this word calibrated?
Vipul Mathur: When I say calibrated, the intent was that, A, the intensity of the projects which were being discussed, announced in the last six months, nine months, that is what I am trying to say, it is calibrated. Because everyone has clearly understood that in a space like this, when beyond a point, there will be a supply constraint, it is better to calibrate the requirements and calibrate their plans. That is what, not that the demand is going to get calibrated, it is the timing of that part is going to get calibrated. That is what I meant.
Ritesh Shah: Sure. Just as a follow-up over here, given I think most of the capacities will be probably booked or sold out, then how are we taking a call on value versus volume, or how are we looking to maximize profitability? Can US orders, say, reap us more than $400, say, into 2028, 2029, 2030? Is it a scenario that you probably won't rule out?
Vipul Mathur: There's no scenario which cannot be ruled out. We are not ruling out any scenario at this point in time. I think there is an opportunity which is there. We have the capacity and the capability to accommodate more orders. If you see, we are making all that strategic calls. Even yesterday, we announced that we will be doing some augmentation of our capacity. That's all being done with a very strategic purpose, and the whole objective behind that seems to is only one, to maximize the profitability around it. The volume growth and the profitability growth.
Ritesh Shah: Okay. My question, let me be a little direct. Given we already have visibility on volumes, is it possible to maximize the gross profit or EBITDA per ton by choosing more profitable orders, or are we looking to swap something which is more profitable versus something which is already on the order book? Is there some probability for that to happen?
Vipul Mathur: No. There's no probability for a swap. We are not looking for a swap. What we are aiming and what we are preparing ourselves for more orders and more profitable orders. That's what the capacity augmentation we are doing at this point in time.
Ritesh Shah: Okay. Is it possible to have visibility into 2030 and 2031? Are we ready for it, or is it like-
Operator: Sorry to interrupt, Mr. Ritesh. I would please request you to come back in the queue for further questions. Thank you. The next question comes from the line of Abhi J. with AJ Capital. Please go ahead.
Abhi Jain: Hi, good afternoon. Hope I am audible.
Vipul Mathur: Yes, you are.
Abhi Jain: First of all, sir, congratulations on the path that Welspun has been. It has been a tremendous opportunity which has been seized by you, even though you have gone through some tough times with respect to the India operations. So congratulations on that. My first question is, I just wanted to understand that since our pipe volumes are down this year-on-year, we have already done H1 of about INR 11,225 crores. To do the next INR 20,000 crores, you would need to be about almost 20% to 25% over and above that one that you have done. Just want to understand that given that the pipe volume are down, the volatility and the geopolitical volatility still persist.
Abhi Jain: Obviously, Saudi Arabia, there is a great opportunity that is brewing, but given the Houthis attacks and given the pre-occupation attack, just want to understand that can this shift from FY27 or from H2 to next year H1, do you see that there is some variability in the environment right now that you are operating in?
Vipul Mathur: If I understand, you have two questions. Number one, with respect to the performance in this financial year. I think so despite all that what is happening around, all that variability which is what is impacted with, I think so we would still be well within, if not better than our guidance. So we are very, very clear about it. If you see in the H1, we have been able to deliver what we have committed. I think so the H2, the way the visibility looks to us, I think so we should be, in any case, be able to achieve, if not exceed, our guidance. That is one part of it. The second part of it, that what is it going to happen in the next financial year, the next financial year?
Vipul Mathur: I think so that is the time where our new capacities will come up on stream. The new capacity in US will come on stream, and the new capacities of Saudi will come on stream. In any case, that incremental impacts will start coming in from these new capacities in the next financial year. The only vulnerability could be a little bit of Saudi. In the next one or in a few months, couple of months, if this supply chain conditions improve, then you will have the full impact of profitability coming from there. If it gets prolonged, then there could be a slight lag around it. That is the only difference which can be there. But other than that, we would see definitely an incremental earnings and profitability coming up against all that investments what we have done. They are all backed by orders in any case.
Vipul Mathur: In US, in any case, that is all already backed by an order. So, there is no doubt whatsoever that the H1 of the next year is going to be different than the H1 of this year.
Abhi Jain: Yeah. No, we understand obviously given the political environment and given where we are, things could shift by a quarter or so that is appreciated. My second and final question was that, in your presentation that I have gone through, you have called out the US EBITDA per ton exceptional against a sustainable $300 per ton kind of a number. Could you just give us some idea about how these three mega orders that we have in Little Rock, right, and what EBITDA per ton are they priced at? I just want to understand whether through FY29, that the orders that they have to execute in US, are the margins locked in or can they shift? Even the volatility, I would say, even in US itself, we do not know what will happen in midterms, we do not know how the political scenarios change, right?
Abhi Jain: The drill, baby, drill, whether it takes a backseat or not. Just want to understand whether the margins are locked in for till FY29 also on the US orders.
Vipul Mathur: Yes, they are. The short, simple answer to that is they are.
Abhi Jain: Oh, perfect. Thank you from my side. Hope the volatility subsides so that you can go ahead with your blazing results that we all expect. Thank you.
Vipul Mathur: Thank you.
Operator: Thank you. The next question comes from the line of Pranav Mehta with Equirus. Please go ahead.
Pranav Mehta: Yeah. Thank you for taking my question. Am I audible?
Vipul Mathur: Yeah.
Pranav Mehta: Yes, sir. Sir, I just wanted to understand on the order pipeline that we are seeing, like, let's say Middle East and America. How are the things panning out in Australia and your LATAM and then your Southeast Asia? If you can throw some light on that, because those opportunities we can service from our export business.
Vipul Mathur: That is correct. That is a good question, Pranav. I think, as I said, all these regions are serviced out of India and India exports. As I said earlier as well, we were seeing a strong pipeline, and we are continuously seeing a strong pipeline of the projects around this particular region. That is the reason we have no doubt whatsoever with respect to, in our mind, with respect to exports out of India. This pipeline of the projects is looking extremely good in these regions what you mentioned.
Pranav Mehta: Sure. My next question was on something which is currently developing globally, but wanted your thoughts on how the hydrogen pipeline play can help us if we can see some improved traction over next 2, 3 years in this category as well? Because Europe is seeing a lot of hydrogen pipeline-related activities.
Vipul Mathur: Pranav, there is still an activity which is happening, but it has definitely slowed down, or it has taken a little backseat in comparison to what it was like 2 years back, right? While in Europe, it is still there, but let's say in India or in other market, it has taken a little bit of a backseat. Having said that, I think, is that a business opportunity? Yes, it is a big, a large business opportunity, which is there, but in terms of prioritizing it, I think now the focus is more on energy security and ring fence, every country ring fencing with themselves with respect to that. So, I think hydrogen has slightly taken the backseat, but it cannot be discounted. It is going to be a massive opportunity which will come up in future.
Vipul Mathur: It is just a slight time calibration which seems to be happening.
Pranav Mehta: Got it. Yeah. Sure, sir. Those are my questions. Thank you very much.
Operator: Thank you. The next question comes from the line of Darshil Jhaveri with Crown Capital. Please go ahead.
Darshil Jhaveri: Hello. Thank you so much for taking my question, sir. Firstly, congratulations on a really great set of numbers, sir. Sir, just wanted to double-click on our guidance. I think we have given our guidance of around INR 2,850 crores, but the run rate that we are going, I think we should easily surpass it, right? H2 is seasonally better. So, would you think that our current, we can outperform guidance that we have given, sir?
Vipul Mathur: I would love to say yes, but the fact remains that as I have been talking on this call for some time, there are so many variables on which you have no control on. We see a strong traction in H2, but given all that variability which we are surrounded with, I think we would still like to be cautiously optimistic around that. We would love to stay around the guidance what we have given, but we will be extremely pleased that we exceed that. In the past preceding couple of years, we have seen that whatever we have committed, we have always exceeded that. That will still be our endeavor. But I just like to be a little cautious in terms of over-committing, depending because there are a lot of things which are not in our control, and I hope you understand that.
Darshil Jhaveri: No, that is fair to say, sir. I just wanted to know in terms of the Saudi reconstruction, I do not know if it is relevant to us or not, but if the attacks are going on, is there a chance of them trying to attack industrial areas or somewhere where our plant is or impact, like something that has happened till now or something that you would like to comment on, sir?
Vipul Mathur: See, it is something not correct on our part to comment on, to be honest. But what I can make a sort of an assessment, I think, sir, this seems to be more of a positioning rather than a full-scale war in terms of that, as what is happening between the two European nations. I do not think so that is the situation we are seeing or watching or even expecting on that in this part of the world. While there is a disruption, but that disruption is more of positioning rather than going out all in about the infrastructure facilities of both the countries. I do not think so. We are not seeing that. Now we are hearing that.
Darshil Jhaveri: Oh, okay.
Vipul Mathur: So, we are pretty confident around that it is not going in that direction.
Darshil Jhaveri: Okay. Fair enough. Yeah, that is it from my side. Thank you so much. All the best.
Operator: Thank you. Ladies and gentlemen, you are requested to limit your questions to one question per participant. Thank you. The next question comes from the line of Bhavin Sheth with Anarm Holdings. Please go ahead.
Bhavin Sheth: Yeah. Good afternoon, sir. Sir, any traction seen in stainless steel bar and pipes business? Any orders, new segment? How is that business? Though it is very small, but maybe two to three of you there.
Vipul Mathur: Bhavin, on the stainless steel side of it, I think from what we are seeing, there is a shift which is happening. We are seeing a lot more traction domestically rather than happening on export side of it because of all that what is happening in the European market at this point in time and the disruptions which is happening. But the good part is that the domestic market is looking strong. The volumes seems to be picking up. They have been slightly muted in the last quarter. There is no doubt about it. But I think so the next two quarters are looking much more promising in comparison to Q2.
Bhavin Sheth: Okay. Thank you, sir.
Operator: Thank you. The next question comes from the line of Meet Bhuva with Integrity Ventures and Partnerships. Please go ahead.
Meet Bhuva: Yeah. Hi. Congratulations on good set of numbers. Am I audible?
Vipul Mathur: Yes, please.
Meet Bhuva: Yeah. Hi, sir. All of my major questions have been answered. I just want to ask on the Sintex side. Our loss is kind of doubled in this quarter. Just wanted to understand how we are planning to take this business to the break-even in the coming years.
Vipul Mathur: That's a good question, and we have Yasho here, and you will directly hear from him as to what exactly they have been, what they are doing, and what exactly their plans are going to be in the next couple of quarters. Yash, it will be very helpful to hear from him, please.
Yashovardhan Agarwal: Yeah.
Vipul Mathur: Yasho, please.
Yashovardhan Agarwal: Yeah. So, just reframing, you are saying, how are we improving EBITDA, or how we are improving margins? Was that the question?
Meet Bhuva: Yeah. How we will be coming to the break-even?
Yashovardhan Agarwal: Yeah. Right now we are focusing on premiumization of our products, and our premium portfolio is growing strongly.
Yashovardhan Agarwal: That is one element. The second element is, see, we have been very aggressive in investing in our R&D and our technology, the digital front. Barring that, if I am able to take out the cost of my marketing, my R&D, we are very close to break-even, if not already. It is just certain investments that we are taking call where we really want to aggressively play, and these, let us say, are the building blocks of tomorrow, not today. I do not want to hurt the future of the company for today's break-even, and that is the call I am going to be taking.
Meet Bhuva: Okay. Basically, premiumization will be the one major growth driver that will take us to the break-even.
Yashovardhan Agarwal: We have seen a strong impact in volume also of our products with economy. Sintex as a whole was never there in economy. We need that as a volume driver, so focusing on premiumization and so on.
Meet Bhuva: Okay. Got it. Thank you so much.
Operator: Thank you. The next question comes from the line of Ashay Sheth with Ventura Securities. Please go ahead.
Ashray Sheth: Hi, sir. Thank you for the opportunity, and sir, congratulations for a wonderful set of numbers. Firstly, I wanted to ask about the Saudi competitive intensity that might be playing out. Sir, we have seen that several of our peers have also announced capacities in Saudi, and with the current geopolitical situation, there might be some delay in order intake. Our capacities have been expected to come upstream much ahead of our competition, but given the demand cycle may be pushed out, do we see any risk of competitive intensity catching up? What gives you confidence that Welspun can still lock in sufficient volume and maintain attractive margins with those volumes?
Vipul Mathur: In terms of See, Saudi market was always a competitive market. The competitive intensity was always there. It is not that we were the only line pipe player in that country, number 1. Number 2, as we speak today, our assets are completely ready, but they will be ready in this quarter itself. Then, as and when we would have the opportunity to serve the market, we will start serving that. I think so few of the competitors would still have a lot of work to do. Having said that, there is a competitive landscape, number 1. It was preexisting. It is only increasing. But at the end of the day, Welspun is all about niche. The plants what we have set up is to cater to the niche segment of that particular market. We know what their segments are.
Vipul Mathur: We have positioned ourselves accordingly, and I do not think so that we are going to get any impacted around that.
Ashray Sheth: Okay, got it, sir. Sir, on Welspun Specialty business, over the last few years, we have consistently built our capabilities in terms of qualifications. We have got qualifications from NTPC, BHEL, and NPCIL. Could you help us understand how is the order book shaping up for that business, and how would the split look like across nuclear, specialty chemical, oil and gas, and defense? Which of these verticals are you expecting could drive the specialty business growth?
Vipul Mathur: See, we have been, as you know, this business is with very tough entry barriers, number 1. Number 2, the USP of Welspun Specialty is that they are the only integrated player. They are having their own steel, having their own pipes, right? Number 3, all through this, in the last 2 or 3 years, we have been gradually building the blocks, and we have been absolutely in black. Earlier, this company used to be in red. So, directionally, we are moving in the right direction. Let's not forget, this is the only integrated company. What is the key demand driver now going to be is the power gen. There is a massive power gen requirement, which is the capacity which is being built up in India, right?
Vipul Mathur: I think so this is where we will see that Welspun Specialty playing a major role in quarters and years to come. This is a long-haul demand. It is not going to be a sort of a quarter-on-quarter demand or a 1 or 2-year demand. It is a structural change, again, which is happening, and it is an 8 to 10-year demand in the power gen sector, which will also be compounded with the nuclear in years to come. So, this is what we are getting prepared for, this is what we are ready for, and this is where we see that the next growth story of WSSL is going to come in from.
Operator: Thank you, sir. Ladies and gentlemen, due to time constraints, that was the last question for today. I now hand the conference over to the management for closing comments.
Percy Birdy: Thank you for attending this today's call. I hope we have answered all your questions. If any of you have any further queries, please feel free to contact our investor relations team, and we will be happy to assist you in this regard. So, wish you all a great year ahead, and wish you all a happy Diwali.
Operator: Thank you, sir. On behalf of 360 ONE Capital Market Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.
