Up 55% In A Month: How Welspun Corp Riding America's AI Data-Centre Boom

Welspun Corp has quietly moved beyond its identity as a traditional pipe manufacturer. Today, it sits at the intersection of artificial intelligence, data centres and the energy transition. This pivot is a deliberate move towards becoming a diversified, multi-material infrastructure player with exposure to long-cycle sectors globally.

Core Business

The company operates through two core verticals: pipe solutions and building materials. In pipe solutions, Welspun is among the top two global manufacturers of large-diameter line pipes, supported by an installed capacity of about 2.2 million tonnes per annum across India, the US, and Saudi Arabia.

Its product portfolio spans large-diameter welded pipes, ductile iron pipes, stainless steel bars, pipes and tubes, as well as specialised coatings and pipe bends. The building materials segment complements this with TMT rebars, plastic water storage tanks, and containers, including plastic pipes and fittings. This diversification helps balance cyclicality across segments while keeping the core focus on infrastructure-linked demand.

Why Data Centres Need Gas

A new demand driver is emerging from an unexpected corner. The rapid scale-up of artificial intelligence infrastructure is beginning to reshape energy consumption patterns, particularly in the US. Data centres require continuous, reliable power, and this demand is increasingly being met through dedicated natural gas-based power generation.

This has a direct implication for pipeline infrastructure. As data centre capacity expands, so does the need for natural gas transportation networks. Unlike conventional pipelines, these projects require heavy-wall pipes, a niche in which Welspun has strong technical capabilities.

Midstream Pipeline Opportunity

The opportunity is already visible on the ground. Around 9,000 miles of new pipelines are either under construction or in the planning stage in the US, driven not only by rising energy demand but also by liquefied natural gas exports. According to management, eight to nine major pipeline projects are currently under discussion.

Constructing pipeline infrastructure typically takes three-five years, implying that demand for it is not only robust but also could be sustained over several years. For Welspun, this represents a structural opportunity, creating a long visibility cycle for orders. However, the conversion of these planned pipelines into firm orders depends on regulatory approvals and the pace of data center construction.

Building Local Presence in US

To capture this demand, Welspun is localising its manufacturing footprint. It is setting up a 300 kilo tonnes per annum longitudinal submerged arc welded pipe facility in Little Rock, Arkansas. The capacity is expected to be commissioned by December 2026. LSAW is the global standard for rigorous, high-stress applications.

Competitive Advantage

Once operational, this will make Welspun one of only two LSAW manufacturers in the US, giving it a competitive edge. This positioning aligns with "Buy America" provisions, reduces reliance on imports, and shields the company from tariffs. At the same time, it allows Welspun to directly cater to high-specification demand for data centres and offshore projects.

Booked Capacity until March 2028

In addition, this pipeline demand generated by these AI data centers has aggressively consumed the available supply of spiral pipes in the US. Spiral pipes are used for long-distance onshore oil and gas transmission. All of Welspun's existing US spiral mills are already operating at 85-90% utilisation and are fully booked until March 2028.

In addition, the company is upgrading its high-frequency induction welding (HFIW) mill capacity to handle 24-inch pipes. This will enable it to tap into demand for natural gas liquids (NGL) and emerging carbon capture networks. HFIW pipes are also used for the broader transportation of Natural Gas, Oil Products, Water, and Green Hydrogen.

Saudi Arabia's Vision 2030, Saudi Aramco

A similar localisation strategy is unfolding in Saudi Arabia. Welspun is setting up a 350 KMTPA LSAW and a 250 KMTPA ductile iron (DI) pipe facility in Dammam. Both facilities are expected to be completed by April 2026. The timing aligns with Saudi Arabia's infrastructure push under Vision 2030.

Saudi Aramco has increased its capital expenditure (capex) guidance to $52-55 billion to increase gas production capacity by 80% by 2030. This expansion is expected to require around 4,000 kilometres of new gas pipelines. For Welspun, this translates into a large, multi-year addressable market in line pipes.

Import Substitution Strengthens Case

The DI pipe segment adds another layer to the Saudi opportunity. Currently, two-thirds of the market depends on imports, while the remaining third is constrained by limited local capacity. Here, Welspun is targeting this import-heavy segment through its new facility.

At the same time, ongoing anti-dumping duty investigations on cheaper imports are expected to discourage foreign competition. This creates a favourable pricing environment and improves margin visibility. The Saudi facility also serves as a strategic export base for neighbouring Middle Eastern markets, particularly those undergoing reconstruction.

India Completes the Growth Picture

While global markets are driving near-term momentum, domestic demand is also set to recover. India's natural gas consumption is expected to rise nearly 60% by 2030. This is expected to be supported by the city gas distribution network and the national gas grid expansion, which plans to add 15,500 kilometres of pipelines.

Jal Jeevan Tailwinds

After a temporary slowdown, pipeline investments are picking up again. Companies such as GAIL, Engineers India, and IOCL are expected to invest between Rs 3,000 crore and Rs 5,000 crore, which should revive order inflows in the coming year. Alongside this, the Jal Jeevan Mission has been extended to 2028 with an allocation of Rs 70,000 crore.

This is expected to drive demand for DI pipes, providing another tailwind. To capitalise on the domestic opportunity, Welspun is expanding its Anjar facility by 200 KMTPA, taking total domestic ductile iron capacity from 400 KMTPA to 600 KMTPA. The expansion is expected to be commissioned in Q2FY26.

Capacity Build-Out Continues Across Segments

The company is also strengthening its integrated capabilities. A 60 KMTPA helical submerged arc welded (HSAW) mill was commissioned in Q2FY26. A coating facility with a capacity of 3 million square metres per annum was commissioned in Q3FY26. The Anjar facility has been upgraded to a hybrid mill capable of producing both HSAW and LSAW.

In addition, Welspun is setting up a hot induction bend facility with a capacity of 1,500 to 2,000 bends annually, expected to be operational by Q1FY27. These additions move the company closer to offering end-to-end pipeline solutions, improving its positioning in large-scale projects.

Financial Performance Reflects Operating Strength

For 9MFY26, revenue grew 24% year-on-year to Rs 12,457 crore. Earnings before interest, tax, depreciation, and amortisation (EBITDA) increased 35% to Rs 1,831 crore, with margins expanding by 120 basis points to 14.7%. Net profit growth remained modest at 4%, reaching Rs 1,249 crore.

This was primarily due to a sharp 52% decline in other income, which stood at Rs 335 crore. Return ratios continue to improve. Return on capital employed (ROCE) expanded to 24.4% in 9M FY26, compared to 21% in FY25. The company is on track to meet its FY26 guidance of Rs 17,500 crore in revenue and Rs 2,200 crore in Ebitda.

The order book stands at Rs 23,600 crore, providing visibility of slightly over one year.

What Changes from Here

The next phase of growth hinges on execution. The US and Saudi Arabia facilities are expected to be commissioned between Q2 and Q4 of the coming year. Once operational, management expects a meaningful step-up in profitability as these projects ramp up. The combination of localisation, higher-value-added products, and strong demand visibility lays the foundation for this earnings expansion.

Valuation Gap

At Rs 1,214 per share, Welspun trades at a price-to-earnings (P/E) multiple of 20.7 times, compared to its five-year median of 14.4 times. The upcoming earnings trigger has already caused the stock to rerate (up 57% in the last month) from 13.6x PE to its current level.

However, it still trades at a discount to peers such as APL Apollo (51) and Shyam Metalics (24). The gap suggests room for further re-rating, but the market will likely wait for execution to translate into earnings.

The upcoming capacity additions and order conversions will be key in determining whether this valuation gap narrows. The real question is whether Welspun can convert this multi-region opportunity into consistent earnings growth. The answer to that will define the next phase of the business.

Disclaimer: The views expressed in this article are solely those of the author and do not necessarily reflect the opinion of NDTV Profit or its affiliates. Readers are advised to conduct their own research or consult a qualified professional before making any investment or business decisions. NDTV Profit does not guarantee the accuracy, completeness, or reliability of the information presented in this article.

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