Buy Welspun Enterprises Ltd For Target Rs. 515 By Geojit Financial Services Ltd
Fundamental View
Welspun Enterprises Ltd. (WEL), a subsidiary of Welspun World, specializes in infrastructure development, particularly in the Water, Wastewater, and Transport sectors. The company also holds investments in Oil & Gas Exploration. WEL, along with its subsidiary Welspun Michigan Engineers, has successfully executed numerous water supply projects and over 1,000 kilometres of road projects.
* In 9MFY25, standalone revenue grew by 16% YoY to Rs.2,093cr, while EBITDA fell 3% YoY to Rs.333cr, and EBITDA margin fell by 283bps to 15.3%. The PAT was flat at Rs.223cr.
* The current order book is at Rs.14,500cr, with ~Rs.9,300cr from the water sector, around Rs.1,950cr from the tunnelling segment, and the remaining Rs.1,750cr from the transportation sector, providing strong revenue visibility in the near future.
* Aligned with the government's infrastructure focus, WEL’s asset-light model and cash-rich balance sheet position them well for future bids, with over Rs.6 lakh cr in projects identified across key segments.
* As per market consensus, revenue and PAT are expected to grow 19% and 14% CAGR, respectively, over FY24- FY26E. Currently, the stock is trading at a 1-year forward P/E ratio of 17x, with a healthy RoE of 12%.
Technical View
* The stock is rebounding from its Rs.400 low after a 38% correction but trades below key moving averages. Further, short-term resistance is placed at 21- DMA.
* The momentum indicator RSI is placed at 39, signaling recovery from oversold levels, while MACD hints at a bullish crossover.
* The stock is stabilizing after a multi-week low, hinting at a trend reversal. Sustainable trading above the 21-DMA with higher volume may confirm bullish momentum. A breakout above Rs.450–460 may trigger an upward move.
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