India`s Welspun posts steep Q2 profit drop on low domestic steel bar demand
India's Welspun Corp reported a 25% drop in second-quarter profit on Friday, due to sluggish domestic demand for its steel bars amid a slowdown in construction activity.
The company, which makes which makes pipes to move oil, natural gas, and bars for infrastructure, said its consolidated net profit fell 25% to 2.87 billion rupees ($34 million) for the three months ended Sept. 30.
Its revenue from operations slid 19% to 33.02 billion rupees during the quarter.
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KEY CONTEXT
Welspun saw tepid domestic demand for steel bars in the quarter due to above-average rainfall and a slowdown in construction activity, despite improved demand for its steel pipes exports from the U.S. and the Middle East. Steel pipes and tubes are the company's key products.
Demand for its steel bars is expected to pick up from the fourth quarter of the current fiscal year, Welspun said in a statement.
Peer Jindal SAW reported a rise in Q2 profit as a result of higher demand for its pipes in its key Middle East and North Africa (MENA) markets.
PEER COMPARISON
Valuation (next 12 Estimates (next 12 Analysts' sentiment
months) months)
RIC PE EV/EBITDA Revenue Profit Mean No. of Stock to Div
growth growth rating* analyst price yield
s target** (%)
Welspun Corp 17.87 10.70 10.07 -2.87 Buy 3 1.08 0.67
Jindal SAW 10.61 7.08 3.44 4.80 Strong 2 0.85 0.61
Buy
APL Apollo Tubes 41.34 26.22 20.27 38.95 Buy 13 0.93 0.36
Ratnamani Metals 32.49 23.21 15.30 22.39 Buy 3 0.94 0.38
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
JULY-SEPTEMBER STOCK PERFORMANCE
-- All data from LSEG IBES
-- $1 = 84.3450 Indian rupees
