(Reuters) – India’s Welspun Corp reported a lower third-quarter profit on Wednesday due to lacklustre demand for its pipes amid a slowdown in construction activity and delays in government projects.
Its consolidated profit before share of profit from joint venture, associates and taxes dipped 4.4% to 3.05 billion rupees (about $35 million) for the October-December quarter.
Welspun reported a one-time gain of 3.78 billion rupees due to a share sale by its unit Welspun Mauritius Holdings, which led to its net profit more than doubling to 6.75 billion rupees.
The company, which makes products including pipes to move oil and natural gas, said its revenue from operations slid 24% to 36.14 billion rupees.
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KEY CONTEXT
Domestic steel demand remained muted in the three-month period due to lower construction activity and delays in projects, analysts said.
The year-ago quarter witnessed a burst of demand as government spending was higher ahead of the national general elections, which has cooled off since then.
The blow to the Welspun’s bottomline was cushioned by a drop in the cost of coaking coal, a key steelmaking raw material. As a result, its total raw material costs dropped 33%.
PEER COMPARISON
Valuation (next Estimates (next 12 Analysts’ sentiment
12 months) months)
RIC PE EV/EBITDA Revenue Profit Mean No. of Stock to Div
growth(%) growth(% rating* analyst price yield
) s target** (%)
Welspun Corp 16.27 9.27 16.31 18.87 Buy 3 0.90 0.67
APL Apollo Tubes 38.06 24.14 20.72 55.73 Buy 14 0.86 0.36
Jindal SAW 7.45 5.24 3.96 8.53 Strong 3 0.58 0.80
Buy
Ratnamani Metals 25.41 17.61 19.33 26.83 Buy 4 0.73 0.49
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
OCTOBER-DECEMBER STOCK PERFORMANCE
— All data from LSEG
— $1 = 87.3710 Indian rupees
(Reporting by Manvi Pant in Bengaluru; Editing by Sonia Cheema)
