Welspun (NSE:WELCORP) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the Welspun Corp. Q2 and H1 FY 'twenty seven Earnings Conference Call. As a reminder, all participant lines will be in a listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Mr. Shailesh Raja from three sixty one Capital Market Private Limited. Thank you, and over to you, sir. Yeah. Thank you, Steve, and welcome, everyone. We thank the Welspun Corp team for giving three sixty one Capital the opportunity to host this interaction today.

0:46 I would now like to invite Mr. Gautam, Head of Investor Relations at Welspun Corp to introduce the management team. Over to you, Gautam. Thank you, Shailesh, and good afternoon to everyone. Welcome to our Q2 and H1 FY twenty twenty seven earnings call. On this forum today, we have Mr. Vipul Mathur, Managing Director and CEO Mr. Persi Bardhi, Chief Financial Officer Mr. Yashuvartha Nagarwal, Director, Syntex and Mr. Harsh Rumta, Head Group Investor Relations. Before starting the call, you all must have gone through the results and the investor presentation of the company, which are also available on the stock exchanges and on our website as well. And during the discussion, we may be making some references to this presentation.

1:36 So I request you to please refer to the Safe Harbor statement, which is there in our presentation. Before the opening remarks, let me just inform you that Mr. Mathieu is a little under weather and is not having a good throat. So we'll start the forum with the opening remarks by Mr. Badhi. And post that, we'll open the floor for the Q and A. With that, let me hand over the floor to Mr. Badhi. Over to you, sir. Thank you, Gautam. Good afternoon, everyone. Let me first welcome you all on this forum to discuss our Q2 and H1 FY twenty twenty seven performance. As Gautam mentioned, I'm sure you all had a chance to go through our results and the detailed investor deck that we published on the exchanges and also on our website. Therefore, would like to highlight only some of the key aspects in my opening remarks.

2:25 And after that, we can have more time for an interactive session. We delivered yet another robust quarter. Our Q2 FY 'twenty seven EBITDA stood at a record all time high of INR782 crore, registering 25% year on year growth. Our half yearly EBITDA rose 30% Y o Y to INR $15.38 crore, again an all time high. This compares favorably with our annual guidance of INR 2,850 crore EBITDA. Our annualized ROCE, return on capital employed for H1 FY 'twenty seven, stood at 22.7 percentage, well above our guidance of more than 20 percentage for FY 'twenty seven.

3:21 Our net debt cash position also improved further to a net cash of INR3887 crore. This is after having incurred CapEx of approximately INR1500 crores for H1 of FY twenty twenty seven. As you know, our order book stands at an all time record high of approximately INR50000 crores, roughly USD5.2 billion. This provides strong growth visibility and underscores our exceeding footprint in the global pipeline market. Before touching upon the business environment, I'm pleased to inform you that the Board has approved three key investment projects.

4:08 Deportlenecking and capacity augmentation of our spiral pipe capacity in The U. S. By 225,000 metric tons per annum at a CapEx of up to USD 115,000,000. This is expected to be ready by March 2028. Setting up of a greenfield spiral pipe plant along with a coating facility in Jordan under a fifty-fifty JV with Burma Pipes and a total project CapEx of up to US125 dollars to be shared with the partner. We are going ahead with this investment on the basis of firm MOU with the developers of Jordan's National Water Carrier Project and the government of the Hashemite Kingdom of Jordan to advance the development of pipe manufacturing and advanced coating facilities in Jordan.

5:02 The proposed facilities will be capable of serving major water, oil and gas, energy and infrastructure projects in the kingdom and also across surrounding regional markets due to Jordan's strategic location. We're also setting up a joint venture in India for internal FB fusion bonded epoxy coating capability in an equal partnership with PermaPipe. This will give us the complete bouquet of pipe coating services, which will enable us to go after large pipe export orders where IFB coating is mandatory. Now let me discuss the business environment. As far as U. S. Market is concerned, demand continues to remain robust. The medium to long term outlook continues to be supported by growth in LNG exports, rising electricity requirements from AI data centers, triggering the demand for new gas pipelines for captive gas turbine power plants and investment across onshore and offshore oil pipeline infrastructure.

6:07 We are currently booked through FY twenty twenty nine in The U. S. KSA market ongoing investments in oil and gas and water infrastructure are expected to support pipeline demand. The region's evolving energy security and infrastructure priorities may also create opportunities. Also, the potential for reconstruction in the Middle East region once the geopolitical situation stabilizes. In the short term, the supply chain, logistics and freight costs in the region have been adversely impacted. Coming to India, the domestic demand continues to remain muted. The domestic water market remains under stress.

6:53 Though there have been some optimism around river interlinking projects and interstate water sharing agreements, However, the central government budgetary constraints need to get lifted for orders to get awarded. On the domestic oil and gas segment, we see lot of potential going ahead in Samudra Manthan in deepwater exploration, in PNG connections and refinery projects. However, we are yet to see the orders inflow. Exports from India, of course, continues to be the bright spot and we continue to focus there where we see good demand coming from The Middle East, Southeast Asia and LatAm. In this context, let me reiterate that our diversified global presence spread across USA, Saudi, India and in future Jordan as well. This helps us in mitigating challenges in a particular geography.

7:51 Moving ahead to Welspun Specialty Solutions Limited, WSSL, While higher freight costs and the tariff regulations impacted exports to Europe adversely in this quarter, WSSL continues to focus on domestic power gen, thermal, nuclear, defense, aerospace, oil and gas and petrochemical sectors, which are the high value added segments for stainless steel bars and seamless pipes. Coming to Syntex, we continue to focus on channel expansion. In water storage tanks, we focus on premiumization alongside sustained momentum, economy segment growth led by urbanization in the tier two cities. In plastic pipes, we have extended footprint to 15 states and continue to focus on product portfolio expansion and brand visibility.

8:45 We remain focused on our core products and geographies, prudent capital allocation, maintaining strong supplier customer relationships, innovation and building capabilities across our organization. Our people remain integral to our growth strategy, while our sustainability agenda continues to guide responsible manufacturing and long term value creation. With that, let me ask the moderator to open the floor for the question and answer session. Thank you, sir. We will now begin with the question and answer session. Session.

10:02 The first question comes from the line of Shaurya Shah with Securities. So, Jasa, your line has been unmuted. Please go ahead with your question. As there's no response, we'll move on to the next question. It's from the line of Vikas Singh with ICIC Bank. Please go ahead. Good afternoon, everyone. Congratulations, sir, on a very good set of number. My first question pertains to US business that, like we said, that we have booked till FY twenty nine.

10:53 While the narrative on the data center and required pipelines still stay strong. So just wanted to understand, do we are still in a position or the customers are looking beyond FY twenty nine to give you more orders? How should we look at the order buildup in that particular geography? Vikash, good morning. Good morning, sir. Good morning. A, the pipeline of the orders or the pipeline of the projects still looks fairly robust at this point in time. However, everyone now understands that ordering has to be slightly calibrated because looking at the capacities, looking at all the orders which have recently been awarded, so we are seeing a little a lot more calibration happening. That does not mean that the pipeline robustness of the pipeline is standing compromised, but it is a very good, intelligent thinking, which is now coming in slightly where the calibration is happening.

12:01 So we will see that as we speak, there are a couple of projects which are still under discussion, which will still get finalized in the next couple of quarters. But the intensity at which they were all getting finalized till now, I think so that intensity will slightly come down and very rightfully so, it should happen that way. So we continue to stay very optimistic, positive about the robustness of The U. S. Business. I have a strong feeling that this demand is going to sustain for next three to five years more over and above 2029 FY 2029. That's the sort of a guide that's sort of a visibility we are getting at this point in time. And but it will now come in a little calibrated.

12:49 Noted, sir. Sir, the second question pertains to our Saudi mill as well as Jordan, which we have been to set up. In terms of fungibility, if U. S. Demand remained extraordinarily high for a longer than expected term, is this capacity, especially the Saudi, which would come earlier, would have a fungibility to U. S? Or that we should not think at this point of time? See, technically speaking, that fungibility do exist. There's no doubt about it. But the fact of the matter remains that the Saudi market itself would be so very buoyant. We are so very optimistic around and about the robustness of that particular market that I think so our first priority would be to cater to the Saudi market.

13:40 I am not discounting the possibility of addressing the North American market. I'm just I'm giving I'm not saying that's just The U. S. Market. I'm not discounting the possibility of addressing the North American market out of Saudi, which is a possibility. But I have a strong reason to believe that Saudi itself is going to keep us busy. But coming back to your Jordan part of it, Jordan is a very, very strategic decision we have taken. Again, a call we have taken. And this was a similar question where we have taken preemptive calls in America or in Saudi, right? I think so keeping that split in mind, we have taken a call in Jordan because we have strong reasons to believe that in times to come, there is going to be a massive reconstruction activity, which is going to get kick started in that particular region.

14:32 And Jordan being at the epic center epic center, all the reconstruction activity, which happens to be in Syria, which happens to be in Iraq, which happens to be in Lebanon, which also happens to be and Jordan itself, there is a massive projects which are going to happen in Jordan itself. I think so we have a strong view that this is going to be this strategic investment is going to pay a huge dividend to us in times to come. No, that's all. I resonate with you on the reconstruction opportunity. So just one last question. We are flooded with cash. Even if I add up all these CapExes, we will still be adding cash over and above this CapEx. So just wanted to understand how the management looks for this cash utilization because this will weigh on your ROE guidance.

15:30 Right. Because we as we have been very careful about our capital allocation policy. So we are and I have clearly articulated our positioning that what is our directive from the Board and how the capital allocation has to happen. So first and foremost, I want to make you once again, I want to reassure you that we will have a very, very disciplined capital allocation policy, number one. Number two, it is also a fact that the current businesses are generating sufficient operating cash flows at this point in time, and we would be absolutely in positive of cash. The cash will the deployment of cash, a, primarily would be for two reasons, a, for growth and b, to our shareholders.

16:18 That is what our the directions what we have from the Board. And at this point in time, what percentage, what is going to happen, how it is going to happen, it's a little premature because first and foremost, the cash come to the bank. Right now, it is only on the paper, it has to come to the bank. But I am only reassuring that, a, the capital allocation part of it is going to be extremely judicious and b, it will only be focused towards growth and it will be for our shareholders. Hello? Hello. Yes, sir. The current participant has been disconnected. We'll move on to the next question. It's from the line of Bhavya Gandhi with Bajaj Alternate.

17:16 Bavia Gandhi, your line has been unmuted. Please go ahead with your question. Hello? Can you hear me? Yes. Yes. Hi. So just wanted to understand what is the big pipeline looking like and what is the usual conversion ratio, if you can highlight on that. You said till FY '29, you are completely booked. I understand. Post that in your very high level experience, usually, what is the cycle period when it comes to this oil and gas and water infra? Is it like a long gestation cycle or is it like a short cycle? If you can just elaborate on that as well.

18:03 Pavia, the bid pipeline in U. S. Looks extremely strong at this point in time. I don't I will the demand robustness is unabated, very strong demand is still appearing. We are still seeing a lot of traction with respect to data centers and demand and, of course, for the LNG exports, number one. And the bid pipeline for the India domestic business is slightly looking weak at this point in time. I am sure that things will improve from here on because the water sector has not been doing good here. We are seeing a little bit of a resurgence in the oil and gas sector. But India export bid pipeline is still looking dope. So India export bid pipeline looking good, but India domestic bid pipeline would have been better. It is a little bit of a matter of a concern.

18:55 Coming back to The Middle East, where the Saudi the Saudi domestic demand is looking extremely, extremely buoyant. I think that the most sooner this geopolitical situation gets addressed and becomes a little stable a bit, I think so we will see a massive resurgence coming up in the Southeast side of it. So from a bid pipeline perspective, other than the India part of it, we are fairly robust. We are fairly comfortable and confident. So would you like to quantify the bid pipeline amount and what is the conversion ratio like? It is changing. By way, it is very difficult to quantify. Typically, we see that in any case, million to 4,000,000 tons of pipeline, in any case are always there in contention.

19:40 But today, things are changing so very rapidly and so very fast. There are so many variables which are impacting it. So it is very difficult to pinpoint it. But it is they still are in the vicinity of almost 2,000,000 to 3,000,000 tons of pipeline at any point in time, we are contemplating and contesting for. Got it. And just a high level question, sir, on the cycle, How long does the cycle last because we are adding capacity, although we have visibility for next few years. Post that, just wanted to understand, will the growth taper off post 30? I know you said you have strong by bit pipeline as well, but just wanted to understand how long does this cycle last? Is it like a five, seven year cycle, or is it, like, more like a three, four year cycle from your experience? Yeah. That's what you're looking.

20:29 Okay. As I have earlier said in my earlier calls as well, see, this is a structural change which is happening in the industry. It is not a sort of a cyclical cyclical paradigm shift we are seeing here. What we are seeing is a very structural shift happening in the industry at this point in time. I think so which means that the demand is going to be for a long haul, both in U. S, both in the Middle East market. I think so it is going to be a long term sustained demand. I mean, what we have a visibility of next five to seven years at this point in time, crystal ball, three to five years, visibility of five to seven years. And if it beyond that, I think it is going to be extremely good for all of us.

21:15 That's really helpful, Encouraging. Thank you so much. That's it from my end. Wishing you all the best. Thank you. Thank you. The next question comes from the line of Pat with Investec. Please go ahead. Hi, sir. Am I audible? Yes, Pat. Hello. Yes. So thanks for the opportunity, sir. I first, I wanted to check on Jordan expansion. So sir, what is the capacity we should work with over here in Jordan? See, we are in the process of finalizing all the capacities and everything, but it is going to be a fairly sizable capacity we will create in Jordan at this point in time. For a simple reason that the requirement in Jordan itself is going to be huge, both with respect to water and oil gas pipeline. So the Jordanian government has only announced that. And as Mr. Persid did mention in the opening remarks that we are going against the backdrop of an order in any case. So it is not that we are putting up a plant and then scouting for the business. We already we will have a business before the plant is good to start. And so it is going to be a sizable capacity, number one. Also, these capacities are mostly because depend on what size and what thicknesses you are doing.

22:37 But I have a sense that it could be anything between 350,000 tons to zero five million tons capacity range. We will be looking at it because the plant, what we have we are looking at, we'll have the capability to do that. Perfect. Perfect. And sir, just to check on the KSA timelines, we had mentioned December 26. Is there a delay or because of the geopolitical reason? No. No. So from a from a commissioning point of view, we are absolutely on track at this point in time, but we we should be, you know, we should be... We are in the final phases of our commissioning, both for our LSOI as well as for the DIP plant. And in this quarter three, we will be done with that. Now the order materialization, the business materialization may take some time because of these conditions.

23:30 So today, we have to also understand and acknowledge that the whole Middle East region is under a massive supply chain disruption. This disruption has to ease out a little bit. There has to be the raw material which has to start coming in. You have to have the ability of the finished goods being exported or finished goods to move out. I think so that disruption is currently in place. It is not impacting us. It is impacting the region at large. So we have to see it in two parts. In terms of our readiness, yes, we will be up and running ready by the end of this particular year. But in order to capitalize upon the opportunities and to start really transacting the business, I think so we are also equally watching with caution, as everyone is, that how is the situation evolving and how quickly is this settling down in The Middle East.

24:29 Got it. Got it. And and, sir, there is this one, you know, announcement by Saudi Arab government that there is... They are expanding the East West pipeline capacity. So would that materialize anything... Anytime soon, or would even that would depend on the supply chain? That is the only... That is the one which you guys are hearing outside. But where... When we are... They are on the ground, we are hearing multiple things. They have a lot of action which is happening there. A lot of action which is happening there. I think that the Saudi government is very, very clear as to what they intend to do, and they are completely accelerating the whole processes, right? I think so there is no let be assured that there is no doubt of a business opportunity, both for the oil and gas with Aramco or in the water sector within Southeast. Be absolutely rest assured. It is just the supply chain disruption, which is currently bothering us and everyone at large. Once that is being taken care of, I think so there is no doubt of opportunity.

25:30 Perfect, sir. That answers my question. Thank you so much. Thank you, sir. Thank you. Ladies and gentlemen, you are requested to limit your questions to two per participant. Thank you. The next question comes from the line of Shaurya Shah with Equator Securities. Please go ahead. Hello, sir. Am I audible now? Yes, we can you. Yes, yes. So just on the U. S. Business again, there was some issue with my line earlier. So apologies if I repeat the same. So of course, the oil and gas front, a large part of order booking has played out. Obviously, the outlook still remains positive. But on the data center story front, so is there further fuel left given the massive build out still happening? So of course INR 5,500 crores order has been booked, but what is your view on kind of further visibility happening on the data center front specifically?

26:29 Sure. So, Shauli, you're right. There's a lot of action happening there because of the data centers. And obviously, they need to have these captive power plants and you need the gas pipelines for them. And one of the recent orders that we won, a large one there, was actually for our data center pipeline. However, there is also a little bit of a moderation that we are witnessing in the last month or so, and which is actually it fits in very well with our business plans as well. So because if everything materializes simultaneously, then really we also wouldn't have the capacity to convert that into business orders. So I think there is still a lot of scope for more and more orders for gas pipelines for data centers, but we have seen a little bit of caution emerging there and which is actually good in our favor.

27:24 I can just add, sorry, on the data, your specific requirement of data center, I think so this demand has now started building up. There was a discussions which were happening, but this demand has now started trickling in, right? And it is now building up. If you look at it, in the next five to seven years' time, the volume of data center demand could outpace the demand for LNG exports. And that is a sense we are getting at this point in time. So as what Mr. Persi said, that while there is a natural calibration which is happening and which has to happen and which is good, but data center story has started earlier, it was only on the books, now then on to the drawing board, now it is coming to the execution. So this is a stream which is opening up beautifully well, and that is where we see that the demand is going to be there, a long term sustained demand is going to be there, please.

28:25 Understood. That is great to hear, sir. And on the Saudi front, so I believe there was implementation of anti dumping duty as well, which has been finalized on the DI pipe imports in Saudi. So like what is your view on the positive sentiment now building up further across the ESF industry in The Saudi as well as surrounding regions, across the MENA region because the desalination stories, I believe, playing out across the MENA region. So what is your outlook on this trend? We are very optimistic. I mean, today, if you look at it, on the DI side of it, only twothree of the DI requirement of the Saudi capital requirement of Saudi was being serviced to imports, right? We are now we are going to be a fairly we are going to be the largest dominant player. So it is going to be a sort of an import substitution.

29:18 Will definitely be first and foremost, first right of refusal in any case for the local demand will definitely come to Welspun. So we are very we are optimistic about this DIP demand. And you are absolutely right, the diesel bottle and the desalination story across Middle East is gaining traction. And you see our expansion into the Jordan territory is also logical in that direction. That is also the play which is happening in Jordan, that is the play which is going to happen in which is only happening in Saudi and that is the play which will also happen in the other Middle East regions as well. Understood. Yes, those are the questions from my side. You and good luck for the future. Thank you.

30:04 Thank you. The next question comes from the line of Sneha with Nuvaama. Please go ahead. Hi, sir. Thanks a lot for the opportunity. Just couple of questions from my end. One is in the Saudi front. You said, you know, everything is on track. The demand is pretty good. It's just that you're waiting for the line to, you know, start opening things. In that case, what could be the utilization levels and how they can inch up for '28 and '29? Some color there would be helpful. See, as I said that the demand both for oil and gas and water is extremely strong. I am in the very first year of operations, we have if everything is even sold and the whole supply chain and the region gets stabilized, we are looking at a very high percentage of our capacity utilization.

31:05 We are not going to touch 100% in the very first year. It is not that you press a button and you start doing that. But our ramp up would be very, very fast. Our stabilization would be very, very fast for two simple reasons. Number one, that A, the demand is only demand is there B, you are on the ground and C, these are the products, which is our bread and butter, which we produce every day and day out globally. So we are absolutely on top of things. Now how much what sort of a capacity utilization will happen? I can say it will be a fairly higher percentage of capacity utilization across both the plants what we are anticipating in the next financial year. So just to put a number here, can we put 50, 60% utilization at least in the first year of operation? We should at least be aiming for that, if not more.

31:52 Understood. Secondly, you know, while a lot has been spoken on The US and the demand front, how do we see India? India would, know, phase two years of, you know, call in volumes. Of course, there are two troubles that there's no CapEx happening in India. Apart from that, currently, even the exports is hit due to geopolitical, you know, issues. How do we see the scenario, you know, changing? And, you know, how do we track that, you know, whether the spending and all is, you know, coming back? As I stated, India domestic demand has been fairly sluggish. And I missed to because I mean, I don't want to give a very rosy picture. I think so the way things are appearing, it could be sluggish for the next few quarters as well, especially on the water sector.

32:42 And for the reasons, there are reasons behind it. However, on the oil and gas side of it, I think so, as I said, we are seeing a little bit of an uptick. We are seeing an uptick in the City Gas distribution, so which are very welcoming signs. And we want to see that how they pan out over the next couple of quarters. But overall demand will the domestic demand is going to be under severe stress. Having said that, the export demand out of India, what we are exporting out of India, I think that, that demand was good, is good and will continue to be good, right? It is in few of the markets, you have supply chain issues, but in most of the markets, you don't have it. So I think so our focus will continue to be on exports out of India, right?

33:30 And I'm sure that we have a very impressive record around exports all through these years, and we should be able to maintain that momentum. All the best, team, and thanks a lot. Thank you. You. The next question comes from the line of with. Please go ahead. Thank you for the opportunity, and congratulations for the great set of numbers, sir. Thank you. My first, yeah, my first question is pertaining with the line price to the volume, which are still around 20... More than 2220% and the. So what is the volume guidance for the FY '27?

34:23 Again, I'll come up. This is my first question. So Nitra, the domestic DI pipes market, we all know is facing, what should I say, headwinds. And all the players are getting impacted. So there is a slowdown, JALGI one mission, budgetary allocation, we all know these stories, okay. Welspun strategy is slightly unique. So we are focusing more now on the DI exports and we have done a lot of work there, so especially to markets like Europe, even in The Middle East. A lot of work has been done, accreditations have been obtained And we will see that a lot of our production will start going towards exports.

35:09 And also in the meantime, pig has been doing well for us. And that's where we are not so adversely impacted by all these things. Things could have been better, no doubt. But I think we are reasonably okay in terms of this particular segment. Okay. So volume spend, which we can capture as the same for the INR 27 crores, it will be the same. Domestic DI volumes will be obviously substantially lower, no doubt about it. But our focus is now moving to exports of DI pipes. Okay. Got it. Okay. And second question is about the new India JV, which is about the format of pipes. So that is a good thing. And what would be this product mix overall structure and the margin and the realization, or incremental margins or realizations that you are expecting for?

36:07 So the India JV with PermaPipe is very niche JV. It's for internal FBE coating. The investments that we are talking about is not anything that great. So I mean its total project we are talking is about INR110 crores and both the partners will fund it. So we are talking about a small investment, but it will give us the bouquet of coating services capabilities. So that means we can do any type of coating which a potential customer may be requiring, including concrete wet coating, for example, which we already have. And this opens up opportunities for exports orders, large export orders, where even the bare pipe manufacturing will come to us because sometimes in these orders, there is IFBE coating is mandatory.

36:54 So while this JV gives only the niche capability of IFB coating, but the benefits to us will be much more than that. Okay. And where is the plant located, around like Anja or any location? Yes. Anja. Yes. Anja. Okay. And what is the timeline for this, Krishna? I mean, when it will start contributing the revenue? Think next financial year, it should be up and running. And sir, the last question about the CapEx commitment for FY '27, about this new plan and Jordan JV equity. So what will be the best funders? So what will be the the net debt to EBITDA? It's still below one or how it will be? Can you give some insight?

37:43 So, Nitra, you already know our numbers. The consolidated net cash that we have is close to INR3800 crores, okay. While we do have some CapEx remaining in Saudi and in USA, and we have also announced these three new investments, But we are reasonably sure that we'll continue to remain in net cash position even after completion of all these CapEx. All the best, Thanks, Arun. Thank Thank you. The next question comes from the line of Ritesh Shah with Investec India. Please go ahead. Hi, sir. Thank you for the opportunity and congratulations for wonderful results.

38:30 Sir, I just wanted to understand why is the supply curve not reacting to the demand that we are looking in the marketplace. So we do understand that there are entry barriers, which are very genuine approvals take time. But you have several companies operating in North America as well as Middle East. Are there any incremental announcements that you are hearing from a supply cost standpoint? So I think your question is more focused on North America, Ritesh. See we compete with two, three players there and Welspun in USA is of course the largest market share over there. The other players are also a little bit of doing debottlenecking and a little bit of capacity augmentation.

39:19 Okay, so I think we will our market share is likely to increase as we go forward. So with our capacity expansions that we have announced, we really stand to gain. And the competitors are also doing a little bit, but nothing comparable to us. So I think we are on a stronger wicket and there are specific advantages that we have. So our complex in USA in Little Rock is spread over almost 800 acres of land and that gives us lot of advantages. The storage facilities and the infrastructure that is there, the proximity to the port, transportation, logistics, railway lines. Some of these things are not really available with the competitors.

40:04 So even if they were to do all these things, it will take them longer time, probably larger investment. And that's probably the reason that Welspun is able to move fast because of this infrastructure setup, which we already have there. Sure. This is helpful. My second question is, I think in the one of the earlier comments, I think, Mataji used the word calibrated. Just wanted to understand, and I think this question was with respect to visibility of FY 'twenty nine, FY 'thirty. I just wanted to understand why the use of this word calibrated? When I say calibrated, the intent was that, a, the intensity of the projects which were being discussed, announced in the last six months, nine months, that's what I'm trying to say, it is calibrated because everyone has clearly understood that in a space like this, when beyond the point, there will be a supply constraint, it is better to calibrate the requirements and calibrate their plans. So that is what not that the demand is going to get calibrated, it is the timing of that part is going to get calibrated.

41:16 That's what I meant. Sure. So just as a follow-up over here, given I think most of the capacities will be probably booked or sold out, then how are we taking a call on value versus volume or how are we looking maximize profitability? Or can U. S. Orders, say, reap us more than $400 say, into twenty eight, twenty nine, thirty? Is it a scenario that you probably won't rule out? There's nothing there's no scenario which cannot be ruled out. We are not ruling out any scenario at this point in time. Think so there is an opportunity which is there. We are we have the capacity and the capability to accommodate more orders. If you see, we are making all that strategic calls. Even yesterday, we announced that we will be doing some augmentation of our capacity.

42:03 That's all being done with a very strategic purpose. And it is the whole objective behind that seems to is only one to maximize the profitability around it. The volume volume growth and the profitability growth. So my question, let me be a little direct. Given we already have visibility on volumes, is it possible to maximize the gross profit or EBITDA per ton by choosing more profitable orders? Or are we looking to swap something which is more profitable versus something which is already on the order book? Is there some probability for that to happen? No. There's nothing called there's no probability for a swap. We are not looking for a swap. We are what we are aiming and what we are preparing ourselves for more orders and more profitable orders. That's what the capacity augmentation we are doing at this point in time.

42:56 Okay. Sir, then is it possible to have visibility into thirty and thirty one? Like, are we ready for it? Or is it right Mr. Ritesh, I would please request you to come back in the queue for further questions. Thank you. The next question comes from the line of Abhi Jay with AG Capital. Please go ahead. Hi, good afternoon. Hope I'm audible. Yes, you are. First of all, sir, congratulations on the power that WELCORP has been. It has been a tremendous opportunity that has been sized by you even though you have gone through some tough times with respect to daily operations. So congratulations on that. So my first question is, I just wanted to understand that since our pipe volumes are down this year, year over year, We have already done h one of about 11,235 crores.

43:55 And, you know, for... To do the next 20,000 crores, you would need to be about almost 20%, 25% over and above the hedge fund that you have done. So I just want to understand that given that the price volume are down, the volatility and the geopolitical volatility still persist. Obviously, Saudi Arabia, there is a great opportunity that is viewing, but given the Houthis attacks and given the preoccupation attacks. Just want to understand that, can this shift from FY 'twenty seven or from H2 to next year H1? Do you feel that there is some variability in the environment right now that you're operating in? So if I understand, you have two questions.

44:41 Number one, with respect to the performance in this financial year, I think so despite all that what is happening around, all that variability, which is we are one is impacted with, I think so we would still be well within, if not better than our guidance. So we are very, very clear about it. And if you see in the H1, we have been able to deliver what we have committed. And I think so the H2, the way the visibility looks to us, I think so we should be, in any case, be able to achieve, if not exceed our guidance. That's one part of it. The second part of it that, A, what is it going to happen for the in the next financial year, the next financial year. I think so that is the time where our new capacities will come up on stream. A, the new capacity in U. S. Will come on stream and B, the new capacities of Saudi will come on stream. In any case, that incremental impact will start coming in from these new capacities in the next financial year. The only vulnerability could be little bit of Saudi for us in the next one or in a few months or couple of months, if this supply chains and conditions improve, then you will have the full impact of profitability coming from there. If it gets prolonged, then there could be a slight lag around it. That's the only difference which can be there. But other than that, we would see definitely an incremental earnings and profitability coming up against all net investments what we have done.

46:11 And they are all banked by orders in any case. In U. S. In any case, that is already banked by an order. So there is no doubt whatsoever that the H1 of the next year is going to be different than the H1 of this year. Yes. We understand, obviously, given the political environment and given where we are, things could shift by quarter, so that is appreciated. So my second and final question was that in your presentation that I've gone through, you have called out The U. S. EBITDA per ton exceptional against the sustainable $300 per ton kind of a number. Could you just give us some idea about how these three mega orders that we have in Laderov, right? And what EBITDA per ton are the price back? I just want to understand whether through FY twenty nine that the orders that we have to execute in US, are the margins locked in? Or can they shift?

47:00 Even though volatility, I would say, even in US itself, we don't know what will happen in midterm. We don't know how the political scenarios change, right? The drill, baby drill, whether they take back figure months. So just want to understand whether the margins are logged in for FY 2029 also on The U. S. Orders? Yes, they are. The short simple answer to that is they are. Okay. Perfect. Thank you from my side and we hope the volatility subsides so that you can go ahead with the blazing results that you all expect. Thank you. Thank you. Thank you. The next question comes from the line of Pranav Mehta with Equiris. Please go ahead. Yes. Thank you for taking the question. Am I audible? Yes.

47:47 Sir. Sir, so I just wanted to understand on the order pipeline that we are seeing, like, so let's say, in Middle East and America. So how are the things spanning out in Australia then LatAm and then your Southeast Asia, you can throw some light on that. Because those opportunities we can service from an export business. That's right. That's a good question, Pranav. I think so as I said, all these regions are serviced out of India and India exports. And as I said earlier as well, we were seeing a strong pipeline and we are continuously seeing a strong pipeline of the projects around this particular region. And that's the reason we have no doubt whatsoever with respect to in our mind, with respect to exports out of India. So this pipeline of the projects is looking extremely good in these regions what you mentioned.

48:46 Sure, sure. And sir, my next question was on something which is currently developing globally, but wanted your thoughts on how the hydrogen pipeline play can help us if we can see some improved traction over the next two, three years on this category as well because Europe is seeing a lot of hydrogen related hydrogen pipeline related activities. There is still an activity which is happening, but it has definitely slowed down or it has taken a little backseat in comparison to as what it was like two years back, right? While in Europe, it is still there, but let's say, in India or in other markets, it has taken a little bit of a backseat. Having said that, I think so is it is that a business opportunity?

49:38 Yes. It is a big a large business opportunity, which is there. But it will in terms of prioritizing it, I think that now the focus is more on energy security and ring fence every country ring fencing with respect to that. So I think the hydrogen has slightly taken aback, but it cannot be discounted. It is going to be a massive opportunity, which will come up in future. It is just a slight time calibration, which seems to be happening. Correct. Yes, sure. Those are the micro shifts. Thank you very much. Thank you. The next question comes from the line of Danshil Jawberry with Crown Capital. Please go ahead. Hello. Thank you so much for taking my question. So firstly, congratulations on a really great set of numbers, sir. Sir, I just wanted to, you know, double click on our guidance.

50:34 I think we've given our guidance around $28.50 crores, but the run rate that we are going on, I think we should easily surpass it. Right? So h two is feasible better. So would you think that, you know, our current... We can outperform guidance that you've given, sir? I would love to say yes, but the fact remains that as I've been talking on this call for some time, there are so many variables on which you have no control on. I mean, we see a strong traction in H2. But given all that variability, which we are surrounded with, I think we can we would still like to be cautiously optimistic around that. We have we would love to stay around the guidance what we have given, but we will be extremely pleased that we will exceed that. In the past preceding couple of years, you have seen that whatever we have committed, we have already exceeded that. That will still be our end over. But I just like to be a little cautious in terms of over committing, depending because there are a lot of things which are not in our control. And I hope you understand that.

51:38 No, no, no, that's fair to say, sir. And I wanted to know in terms of the Saudi reconstruction. I don't know if it's relevant to us or not, but if the attacks are going on, are they... Is there a chance of them, you know, trying to attack industrial areas or somewhere where a plant is intact, like, something that's happened till now or, you know, something that you would like to comment on, sir? We see it is something not correct on our part to comment on, to be honest. But what I can make as sort of an assessment, I think so this is more of a this seems to be more of a positioning rather than a full scale war in terms of that as what is happening between in the European between the two European nations. I don't think so that is a situation we are seeing or watching or even expecting on that in this part of the world.

52:33 It is while there is a disruption, but that disruption is more of positioning rather than going out all in about the infrastructure facilities of both the countries. I don't think so we are not seeing that. Now we are hearing that. So, we are pretty confident around that, that it is not going in that direction. Okay. Fair enough. Yes. That's it from my side. Thank you so much. All the best. Thank you. Ladies and gentlemen, you are requested to limit your questions to one question per participant. Thank you. The next question comes from the line of Bhavan Chedda with Innav Holdings. Sir, any traction seen in stainless steel bar and pipes business?

53:24 Any orders, new segment? How is that business? Though it's very small, but maybe two to three year view there? I mean, the stainless steel side of it, I think from what we are seeing, there is a shift which is happening. We are seeing a lot more traction domestically rather than happening on export side of it, because of all that what is happening in the European market at this point in time and the disruptions which is happening. But the good part is that the domestic market is looking strong. The volumes seems to be picking up. They have been slightly muted in the last quarter. There's no doubt about it. But I think so the next two quarters are looking much more promising in comparison to quarter two.

54:16 Okay. Thank you, sir. Thank you. The next question comes from the line of Meet Buha with Integrity Ventures and Partnerships. Please go ahead. Yeah. Hi. Congratulations on good set of. Am I audible? Yes, please. Yeah. Yeah. Hi. So all of my major questions have been answered. I just want to ask on the fintech side. So like our loss is kind of doubled in this quarter. So just wanted to understand how we are planning to take this business to the breakeven in the coming years? Mr. Zhu, I think that's a good question, and we have the issue here and directly hear from him as to what exactly they have been what they are doing and what exactly their plans are going to be in the next couple of quarters.

55:06 It will be very helpful to hear from him, please. Yasho, please. Yes. So just reframing, you're saying how are we improving EBITDA or how are improving margins? Was that the question? Yes. Yes. How we will be coming to the breakeven? Yes. So right now, we're focusing on premiumization of our products, and our premium portfolio is growing strongly. So that is one element. The second element is, see, we've been very aggressive in investing in our R and D and our technology, the digital front. So barring that, I'm able to take out the cost of my marketing, my R and D, we very close to breakeven, if not already.

55:51 It's just certain investments that we're taking call where we really want to aggressively play and these, let's say, are the building blocks of tomorrow, not today. So I don't want to hurt the future of the company for today's breakeven. And that's the call I'm taking. Okay. Okay. So basically, premiumization will be the one major growth driver that will take us to the Seen a strong impact in volume also for products with the economy. So Syntax as a as a whole was never there in economy. So we've seen that as a volume driver. So focusing on patient and support. Okay. Okay. Got it. Got it. Thank you so much. Thank you.

56:37 The next question comes from the line of Ashwai Sheth with Ventura Securities. Please go ahead. Hi, sir. Thank you for the opportunity, and, sir, congratulations for a wonderful set of numbers. So firstly, I wanted to ask about the Saudi competitive intensity that might be playing out. So, sir, we've seen that several of our peers have also announced capacity in Saudi. So in the current geopolitical situation, there might be some delay in order intake. So our capacities have been expected to come much ahead of our competition. But given the demand cycle may be pushed out, do we see any risk of competitive intensity catching up? And what gives you confidence that Welspun can still lock in sufficient volumes and maintain attractive margins with those volumes?

57:35 So in terms of see, Saudi market was always a competitive market. The competitive intensity was always there. It is not that we were the only line pipe player in that country, number one. Number two, we as we speak today, our assets are completely ready, but they will be ready in this quarter itself. And then as and when we would have the opportunity to serve the market, we'll start serving that. I think so few of the competitors would still have a lot of work to do around that. But having said that, it is a competitive landscape, number one. It was pre existing. It is only increasing. But at the end of the day, the Welspun is all about niche. We are the plans, what we have set up is to cater to the niche segment of that particular market. We know what our we know what that segments are. We have positioned ourselves accordingly.

58:31 And I don't think so that we are going to get any impacted around that. Okay. Got it, sir. Sir, on the Investment Specialties business, over the last few years, we have consistently built our capabilities in terms of qualification. We have got qualifications from MTPC, Bail and MTCIL. So could you help us understand how is the order book shaping up for that business? And how is how the what does split look like across nuclear, specialty, chemical, oil and gas and defense? So and which of these verticals are you expecting could drive the specialty business growth?

59:17 See, we have been as you know, this business is with a very tough entry barriers, number one. Number two, the USP of Welspun Specialty is that they are the only integrated player. They're having their own steel, having their own pipes, right? Number three, all through this, we have been in the last two or three years, we have been gradually building the blocks, and we have been absolutely in black, and earlier this company used to be in there. So we are directionally, we are moving in the right direction. And let's not forget, this is the only integrated company. What is the key demand driver now going to be is the power gen. There is a massive power gen requirement, which is capacity which is being built up in India, right? And I think so this is where we will see that Welspun Specialty Steel playing a major, major role in quarters and years to come. And this is a long haul demand. It is not going to be a sort of a quarter on quarter demand or a one or two year demand. It is a structural change again which is happening and it is an eight to ten year demand in the power gen sector, which will then be followed which will also be compounded with the nuclear index to come.

1:00:27 So this is what we are getting prepared for, this is what we are ready for and this is where we see that the next growth story of WSL is going to come in from. Thank you, sir. Ladies and gentlemen, due to time constraints, that was the last question for today. I now hand the conference over to the management for closing comments. Thank you for attending this today's call, and I hope we have answered all your questions. If any of you have any further queries, please feel free to contact our Investor Relations team and we'll be happy to assist you in this regard. So wish you all a great year ahead and wish you all a happy Diwali. Thank you, sir. On behalf of three sixty one Capital Market Private Limited, that concludes this conference.

1:01:22 Thank you for joining us, and you may now disconnect your lines. Thank you.