Jefferies On Welspun Corp: Welspun Corp could be entering a multi-year earnings upcycle as rising oil and gas infrastructure spending in the US and Middle East meets the company's expanding local manufacturing footprint, according to Jefferies.
Jefferies analysts Sagar Sahu and Nitij Mangal have initiated coverage on Welspun Corp with a ‘Buy' rating and a Rs 3,250 target price, implying around 27% upside from current levels.
The brokerage expects the welded line pipe maker to deliver a 33% EPS CAGR over FY26–29E, supported by capacity additions, a strong order book and a favourable shift towards higher-margin overseas business.
US Energy Spending Opens A Large Opportunity
Welspun Corp is the world's largest welded line pipe manufacturer, with a total capacity of 2.4 million tonnes per annum and exposure to oil and gas, water infrastructure and industrial applications.
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The US is likely to be a key growth driver. Jefferies points to a multi-year investment cycle in US energy infrastructure, led by rising LNG exports, higher power demand from data centres and increasing associated gas production from the Permian Basin.
The brokerage estimates cumulative US midstream capex at $240 billion during CY26–30E, 57% higher than the previous five-year period.
Welspun Corp already commands around 30% of the US market, while its local manufacturing footprint and ongoing capacity expansion provide a direct route to participate in the spending cycle.
Saudi Arabia Could Be The Next Growth Engine
Saudi Arabia presents another major opportunity, with gas transmission and water infrastructure investment gaining importance under Vision 2030.
Welspun Corp has a 22% stake in Saudi-based pipe maker EPIC, which contributed around 20% of FY26 PAT. It is also setting up a 600,000-tonne-per-year capacity through a wholly owned subsidiary in the country.
Jefferies believes rising localisation requirements should further support the company's positioning in the Saudi market.
India Opportunity Remains, But Near-Term Demand Is Mixed
India offers a sizeable long-term opportunity across oil and gas and water infrastructure. However, Jefferies remains cautious on near-term domestic demand, citing slow project execution and higher competitive intensity.
The latter has also resulted in margins being lower in India compared with the US business.
Earnings, Cash Flow Set To Accelerate
Jefferies expects Welspun Corp's volumes to grow at 17% CAGR through FY26–29E, while EBITDA and EPS are projected to compound at 32–33%.
The growth is expected to come from a 51% capacity expansion in the US and Saudi Arabia, alongside a rising contribution from higher-margin international operations.
The company's Rs 42,100 crore order book, equivalent to 2.5 times FY26 revenue, provides considerable revenue visibility. Jefferies expects net cash to rise from Rs 1,400 crore at FY26-end to Rs 3,900 crore by FY29E, while ROE is projected at 22–23% over FY27–29E.
Why Jefferies Likes The Stock
Jefferies values Welspun Corp at 17x September 2028E EV/EBITDA, broadly in line with its current one-year forward multiple.
The brokerage argues that the premium is justified by the combination of strong earnings growth, a robust order book and high returns. At 18x one-year forward EV/EBITDA, it believes the valuation remains reasonable relative to EBITDA growth and ROE.
Key risks, analysts believe, include slower order inflows and delays in capacity expansion.
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