Ladies and gentlemen, good morning and welcome to the Welspun Corp Limited Q4 FY 2025 earnings conference call hosted by JM Financial Institutional Securities Limited. As a reminder, all participant lines will remain in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please email the operator by pressing star then zero on your touch-tone telephone. Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Ashutosh Somani from JM Financial Institutional Securities Limited for opening remarks. Thank you, and over to you.
Thanks, Operator, and welcome everyone to the call. I will first thank Welspun Corp for giving JM Financial the opportunity to host today's call. Without much ado, I'll hand over the call to Mr. Salil Bawa, Head Investor Relations at Welspun Group, to introduce the management. Over to you, Salil.
Thank you, Ashutosh, and good morning to all of you. I welcome all of you to the Q4 FY 2025 earnings call of Welspun Corp. Present along with me today on this forum is Mr. Vipul Mathur, Managing Director and CEO, Mr. Percy Birdy, Chief Financial Officer of Welspun Corp, Mr. Ashish Prasad, CEO of Sintex BAPL, and Goutam Chakraborty, who heads Investor Relations for Welspun Corp. I'm sure you must have received the results and investor presentation of the company, which were also updated on the BSE and NSE, as well as on the company's website. As usual, we will start the forum with some opening remarks by the senior leadership team. We'll then open the floor for your questions. During today's discussion, we may be making references to this presentation. I request you all to take a moment to review the Safe Harbor statement in the presentation.
Should you have any queries that remain unanswered after this earnings call, please feel free to reach out to any one of us. With that, let me hand over the floor to Mr. Vipul Mathur, MD and CEO of Welspun Corp. Over to you, Mr. Mathur.
Thank you, Salil. Thank you, and good morning, everyone. I welcome you all for the Q4 and FY 2025 earnings conference call for Welspun Corp. Let me start the discussion with the key operational and financial highlights of the concluding quarter and the full financial year of FY 2025, followed. We'd like to give you an update on the business environment, on the investments we are making, the market outlook, and the guidance what we wish to give for the FY 2026. Thereafter, we could have interactive sessions, and I would be more than happy to answer all of your questions which you might have in your mind. Just to start, let me now share the key operational highlights for the year. Firstly, our line pipe sales volume for India and U.S. stood at almost 850,000 tons. Our DIP sales volume stood at 272,000 tons.
Our SS stainless steel bars and pipe volume stood at almost 19,000 tons and 4,800 tons, respectively. Our Sintex recorded a sale of INR 600 crore during this year. Currently, our consolidated order book stands at almost INR 19,550 crore. This consolidated order book gives us a clear visibility of more than two years for our U.S. business operations and almost one year for our India LSAW pipe operation, DI pipes operation, and SS pipe operations.
Additionally, the launch of Sintex pipe at our Raipur facility and our readiness of OPVC pipes through our Bhopal plant offers further upside potential in the current financial year. Some of the key financial highlights of this year were we have seen a consistent improvement in our performance on a quarter-on-quarter basis. I'm sure you have tracked that. Our FY 2025 EBITDA stood at INR 1,858 crore and with an EBITDA margin of around 13%.
Our ROCE stood at 21%. Our PAT is almost INR 1,908 crore. I'm also happy to report that the company was able to reduce their gross debt by more than INR 1,000 crore despite having spent almost INR 900 crore towards CapEx in the financial year FY 2025. Currently, we are into a very healthy net cash position of INR 1,050 crore. And considering the performance of the company, the board has recommended that a dividend of 100% on the face value of the share.
Let me now move on to give you my take on the business overview. Let me first talk about the pipes. If we see from India, we are one of the largest exporters of pipes for very critical oil and gas applications, line pipes for oil and gas applications. We are witnessing an increasing trend in the offshore as well as in the offshore pipelines globally.
These requirements are coming up with very stringent technical requirements. They are very, very demanding in nature, and Welspun is only one of the two or three players globally who have the capability to meet such requirements. This positions Welspun into a niche segment in the oil and gas space globally and will continue to keep us ahead in the competitive curve. Further, we are also seeing that the market potential is building up for hydrogen and carbon capture pipelines, where Welspun, through its R&D, global approvals, and participation in formulating the specifications, is very, very favorably placed across the globe. As regards to the domestic oil and gas segment, we are seeing that the Indian government is investing heavily in expanding refining capacity, pipeline capacity, and new LNG terminals to meet their ever-growing energy needs.
We are seeing that the natural gas demand is expected to play a very large role in India's energy mix, with the share of natural gas increasing from 6.7% to 15% by 2030. Also, in the natural gas sector, the contribution of CGD, which is the city gas distribution, accounted for 20% in FY 2024 and is projected to increase to 25% by 2030. So both the transmission and the distribution of the expansion of the natural gas network and expansion of the CGD network in India over the next four or five years is going to be a cornerstone for Welspun's growth in the domestic segment. We are a dominant domestic player, and we will continue to have our share in this particular business. Coming to the domestic water demand, we are seeing significant emerging opportunities for pipes.
When we are talking of interlinking of rivers, we are seeing a push from central states like MP, where we are seeing projects like Ken-Betwa and PKC. In states like Rajasthan, where we are seeing projects like ERCP. In states in Maharashtra, we are seeing projects like Wainganga and Nalganga projects. We expect that the demand for the pipes will kickstart this year. This will be followed by more interlinking projects under consideration in the northern part of India. We are also witnessing that states like Gujarat, MP, Rajasthan, Haryana, Tamil Nadu, and Jharkhand are exponentially increasing the water pipeline network for irrigation, industrialization, and urbanization purposes. As you know, Welspun assets are based out on a pan-India basis. We are present in the West, we are present in the Central, and we are present in the South.
This gives us a unique reach to address all the demands which are coming up in these states. Let me now move attention to the export or the other market, which is the U.S. market. As you know, we are one of the most dominant players of line pipe or dominant line pipe producer in the U.S. market. Currently, we have a market share of more than 30% in that market. As you have also noticed, we have a confirmed order book of more than two years at this point in time. On top of it, we continue to see a very strong visibility of line pipe demand in the U.S. sector. We are seeing a clear visibility of the next three to five years at this point in time after these two years, after consuming of these two years of an order book
The crude oil production in the U.S. is likely to go up to almost 14.5 million barrels per day by calendar year 2030, and the Permian production, which is the largest oil and gas producing field, is likely to increase from current 6.2 million barrels per day to 8 million barrels per day. So this increment, which is happening in the Permian, will continue to show a very, very strong demand for oil and gas pipelines in the U.S. market. On top of it, we are also seeing the LNG exports going up from 90 million tons per annum to 120 million tons per annum in the next two and three years. There will be a huge surge of LNG exports, which will be happening from the U.S. to the European and to the Asian markets.
We are well poised to benefit from this U.S. oil and gas demand, and we are confident to maintain our market share in the future times to come ahead. As regards Saudi Arabia, Saudi Arabia is distinct between two segments: water and oil and gas. As regards water, we are continuing to see a robust demand, and we are seeing a very strong visibility. There is a continuous focus on improving the water infrastructure. With the rise in population over a period of time and infrastructure being built, the need for water transportation and distribution will improve further. We have a dominant presence in that particular market, and we almost capture more than almost 40%-45% of the market share at this point in time in the water sector.
On the oil and gas side, the Saudi Vision 2030, the aim is to expand their domestic gas production further and to reduce reliance on crude oil for electricity and industrial processes, which means that they intend to use gas for their domestic purpose, and they want to export oil globally. This will include now a significant investment in both development of onshore and offshore fields in times to come. Also, we are seeing the Saudi government is making significant investments in the unconventional fields, like unconventional energy needs like hydrogen and carbon capture, so the line pipe requirement or the pipe requirement both for the water as well as for the oil and gas sector in Saudi Arabia remains robust, and we have a very strong outlook, and we stand very positive for the development in this particular sector.
As regards our DI pipes, we have a confirmed, at this point in time, we have almost a confirmed order book of more than 350,000 tons for the DI pipes. This is almost one year of an order book for us. However, in the previous quarters, we have seen a little bit of a slowdown towards the release of funds under JJM funding, but we have now seen that this pain seems to be getting over. We are expecting that things will start improving from the end of the first quarter, beginning second quarter of FY 2026. We have started seeing the improvement. The cash flows, we have seen the cash flows started coming in, and I am sure things will only improve from here on. There are multiple projects which have been announced in FY 2026.
A lot of distribution network is being created across the states of Madhya Pradesh, Maharashtra, Rajasthan, Gujarat, and I think so, and that it gives us a very strong belief that the demand for the DI pipes will continue to stay strong in FY 2026 as well. We have, as a part of our strategy, we are also spreading in the domestic markets like Haryana, Chhattisgarh, Punjab, Odisha, Telangana, and Kerala. While from a freight perspective, these are not very lucrative markets for us, but from a presence perspective and as a strategy, we are making a foray in these markets as well. On top of it, we are also focusing heavily in terms of exporting the DI pipes. As you are kindly aware, we have opened up a subsidiary in Europe, and we intend to export DI pipes to Europe as well.
I am also happy to report that we have made the first shipment which has been received there, and it has been delivered to the customer, and it has been received extremely well. Moving forward, our focus would continue to be on the domestic market, domestic market expansion, and the export. I am sure that these three pillars put together will allow us to be a dominant player into the DI pipe industry. Further, as you are also aware that we are investing for the DI pipe facility in Saudi Arabia, the market scenario and the opportunities for DI pipes in Saudi remain extremely strong. There is a very high demand for the supplies, which is towards import substitution. At this point in time, the local DI players are unable to meet the requirement of the Saudi market.
There is a huge import which is taking place, and I am sure that once Welspun DI facility will come up in Saudi Arabia, which I will subsequently cover on the timeline side of it, we will be able to ride on this wave, and it will set us a very, very strong base as a local DI player in the Saudi market. Coming to our niche stainless steel bar and the pipe business, we had a great year. The FY 2025 was a very defining year for us. The company has really met all the expectations what we had set. FY 2026 has also started on a great note, and we have received an order of almost 4,000 tons from BHEL for SS boiler tube for supercritical power plant, reinforcing our position in the growing power gen segment.
This order will see to it that our pipe capacities are completely booked for almost throughout the year. We are also focusing heavily in terms of making high-grade, high value-added steel. As you know, this is the only facility which is an integrated facility where we make our own steel, where we process our own steel, where we make our own pipes. So this is the only integrated facility we are now focusing in terms of expanding our base in the stainless steel market as well, both domestically as well as exports. We are seeing a good traction coming up both for the pipe and the steel in the value-added segment like defense, space, power gen, oil and gas, petrochemicals, etc. So this company, through its pipe, stainless steel pipe and steel, is absolutely poised to grow from here on.
Coming to the Sintex, we have. Sintex has two distinct businesses. One is the water storage tanks business, and the other is the plastic pipe business. Let me dwell over the water storage tanks business. This year has been a year where we have grown despite the market has shrunk, and that is a clear reflection of acceptance of Sintex brand in the domestic market. We have been pursuing rigorously our channel expansion. Today, I am happy to report that we have more than 13,000 partners associated with us and almost 15,000 plumbers associated with us who are the flag bearers for Welspun Sintex brand. Ashish, am I right on my numbers?
Slightly larger number but that's fine.
Slightly larger number. Okay. The team out here led by Ashish is doing an exceedingly good job in terms of propagating this brand on a pan-India basis.
We are also focusing strongly on the brand building. We have increased our brand visibility through brand sponsorship with WPL, continued BTL activities in print, TV, and OOH media campaigns in the launch markets. Our focus is also to be a premium player. So our sharp focus is on the premium segment. Our premiumization strategy continues to drive our value growth supported by sustainable expansion of the pure franchise. I am sure you would have quite a few questions around the Sintex, and Ashish is here, and I am sure he will be able to address all of them, and this will be addressed in the Q&A session. Coming to the Sintex pipe business, we are operating at two establishments at this point in time. One is at Raipur, and the other is at Bhopal.
The Raipur facility, which is the VTEC facility, is now fully operational, and we have launched multiple products which have been well received in the market. We have, for the very first time, introduced the world's first proven antimicrobial CPVC pipes. The facility at Bhopal, where we are setting up our first OPVC pipe plant, has received its BIS approval. We are now aggressively going to market and build up our market share over the next few months.
We are going to enhance or increase our OPVC capability starting after Bhopal. We will move on to Raipur, and our intent is very, very clear that we will be a formidable player in this value-added OPVC market. I would also like to cover our building materials, the other part of the building materials, which is the TMT bar segment. This year, we achieved the highest sale of 211,000 tons in FY 2025.
We are a formidable player in Gujarat, where we are seeing a substantial demand coming from various infrastructure projects which are happening in the state. We have been able to expand our customer base, and the key and noticeable customers happen to be Reliance, Adani, ITD Cementation, Thyssenkrupp, who are pursuing large infrastructure projects in the state, and we being a quality player within Gujarat, we are in a very formidable position and expanding our base for supply of TMT pipes in Gujarat itself. Our quality has been recognized as one of the premium quality. We have been recognized as one of the premium quality players, and our brand, the Welspun Shield, has created a niche for itself, so these are the few business updates which I wanted to give you about all the business segments what we have.
I would now like to draw your attention to the investments what we have made over the period of time. These investments, there are a few investments which we have notified to you during the quarter three, also during our investor call in November, and there are a few more investments which we have cleared, and they are very synergetic in terms of growing Welspun, taking Welspun Corp to the next level. Our key focus remains intact that we will only participate in core geographies and core products. That is the doctrine we are working, we have agreed to work on, and it is in these guardrails we are working.
Apart from the few projects which we have already notified, announced, and for which I will give you an update subsequently, in our board meeting yesterday, we have also cleared some two or three new projects, and I would like to draw your attention to that. Looking at the ever-growing demand in the oil and gas sector in the U.S. market, and also the change in the dynamics which is happening in the U.S. market, where there is no import which is now going to happen in times to come because of the trade restrictions and the policies and the import duties which have been put up by the current administration, there will be a huge demand which will be coming up for LSAW pipes.
Traditionally, from India, we had been supplying LSAW pipes for the offshore application and for the LNG applications from India on almost 150,000 tons on a year-on-year basis, but that business globally will now go away, which means that there will be no heavy wall pipes which will be coming to U.S. through import route. So considering all those factors, considering the potential it offers now and in the future for the next five to seven years, we have decided to set up a greenfield LSAW pipe manufacturing plant which will include a DJ and a coating plant with a capacity of 350,000 tons. Apart from that, we have also decided to upgrade our existing spiral facility in India. This facility is a hybrid facility which had a provision to make spiral and LSAW pipes both. However, we have always been using this facility as a spiral pipe facility.
What we have decided now to make it completely hybrid as it was originally envisaged, and we are only augmenting the LSAW forming facility into that. So this is a minor upgradation which is going to happen there. Thirdly, along with these pipes, we are seeing a strong demand coming for hot induction bends. We are a player for the hot induction bends. Hot induction bends are a part and parcel of the line pipe business. We have been a player into this particular field, but when we are seeing a huge demand, additional new demand with very stringent specifications with quenching and tempering requirements coming up, considering all that and this requirement and this being a very value-added segment, we have decided to set up a brand new state-of-the-art pipe bending setup at Anjar.
Lastly, as we told you the last time, we are enhancing our pipe making facilities at Bhopal, where we are seeing a huge demand coming up in respect of interlinking of water, rivers, and the water demand and distribution. That facility will also require some calibration for the coating. So basically, we are also adding up a coating facility to meet the gaps between the pipe and the coating out there. So we have decided to set up a coating facility at Bhopal.
These are the four additional investments which the board has cleared yesterday, and I am very sure that all these, apart from the greenfield Elso pipeline project in USA, which is going to be a game changer. The other three are more of a capacity augmentation and capability enhancement, and they will be able to bring a significant amount of value-added and profitability to Welspun's top line as well as profitability. Further, we have also decided to drop our expansion in the DRI capacity as we want to keep our strategy focused on high-priority value-added business segments. At this point in time, we have decided not to pursue with our DRI expansion. As you know, we have well demonstrated our investment rationals in the last few years, which has helped the company to significantly scale up its performance.
Now, as we move forward with the ongoing project, along with the new ones, it will further strengthen our leadership position globally in our core product and core geographies mission. If you recollect, we had announced that the total capital expenditure will be close to INR 5,500 crore over the next two years, which is FY 2026 and FY 2027. And with the calibration what we have done, we would still be within the same CapEx which we have announced even when we are announcing the new facilities. So there is not going to be any additional capital CapEx which we are announcing. We are well within the announced limits even after adding the three or four facilities what we have spoken about. Most importantly, our balance sheet still continues to remain strong. As I said earlier, we are a net cash company.
We have a strong cash available of almost INR 1,000 crore. So our balance sheet remains very, very strong despite this CapEx spend, and we are very sharply focused to be a net debt positive company. Despite making all these CapExes which we will do over the next two years on a year-on-year basis, we will continue to be a net debt positive company. Lastly, as regards to the guidance, as we see that considering the landscape what we have, considering the order book what we have, and considering the potential what the company has, we are significantly enhancing our guidance for the FY 2026. We are giving a guidance for the revenue of almost INR 17,500 crore, which could be 25% higher over the FY 2025 actual.
However, the most important factor to be focused upon is the EBITDA guidance, where we are giving an EBITDA guidance of almost INR 2,200 crore, which is 18% over the FY 2018 actual. If you recollect, friends, I had in my investor meet in November, and in all subsequent quarter calls, we have maintained that we will grow at a 15% CAGR. Last year, this FY 2025, we achieved an EBITDA of INR 1,850 crore. For the FY 2026, we are giving a guidance of INR 2,200 crore, which is 18% over and above the last year. We believe in walking the talk, and I am sure if you see our performance over the last three years where we have given you the guidance, we have always maintained or exceeded what we have committed to you.
Thirdly, and more importantly, at the ROCE, we continue to focus on the same, and we are committing a ROCE of more than 20%. And if you see, this guidance was also given for the last three years, and we have been able to maintain our ROCE exceeding 20%. So a top line guidance of INR 17,500 crore rupees, more importantly, the EBITDA guidance of INR 2,200 crore rupees, and a ROCE of 20%.
Along with this, I am again reiterating that we will keep our net debt to EBITDA less than 1, which means there will be all the CapEx investments which are going to happen. They are absolutely being done in a very, very calibrated manner. All the existing business are generating sufficient free cash flow. We are not going to increase our net debt to EBITDA, which we are very, very mindful of, will always be maintained below 1.
Last but not the least, our focus on digitalization, our people, and sustainable journey remains intact. I am very happy to share that Welspun Corp now ranks among the top 10 in the global steel industry and second among the Indian steel players at S&P Global DJSI Corporate Sustainability Index as of April 2025. Our people are our strength. We are investing heavily into their upskilling growth. We are becoming a very, very systematic and process-driven organization. We are investing heavily into digitalization, and we are creating a foundation and very strong pillars for this company for having a catapulted growth in years to come. With this, I want to thank you for joining us today, and I will request the moderator to open the floor for any questions you, friends and the gentlemen, might have. Thank you very much. Thank you.
Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use their handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Vikash from Phillip Capital. Please go ahead.
Good morning, sir, and congratulations on good set of numbers. Sir, my first question is regarding the guidance. While the revenue is growing by 25%, but EBITDA is growing by 18% only, especially when U.S. is expected to fire. So is the domestic business going to perform poorly on a year-on-year basis?
Good morning, Vikash. I think so.
As I said, the focus on the top line should be your least of your concern because the top line is a factor of the steel pricing, which is a pass-through for us. I think so. As I have always mentioned, Vikash, I think so it will be more prudent to focus on the EBITDA numbers because that is what is in my control. The top line is a factor of steel, which is not in my control. So it is a pass-through. So it is no reflection of India not doing well or U.S. doing better. It is not a reflection of that. It is purely a reflection of the current state of numbers and the steel price which is behaving. So my request would be to you and to all to continue to focus and track our progress with respect to EBITDA, please.
Understood.
Sir, my second question pertains to Sintex. While basically capacity remains the same, our CapEx has come down to almost 1,000 crores. So exactly what has happened there? What portion we have changed to inside that kind of the thing?
Vikash, as you said, as we have mentioned, the CapEx of what we have earlier announced was staggered over multiple years. It was not supposed to be done in one year time. All what we are trying to bring in a very clear visibility that what is the CapEx which we did in FY 2025, what are we going to do in FY 2026, what are we going to do in FY 2027.
The whole objective of bringing this is to bring clarity to all the esteemed investors out here because by saying that I am going to invest INR 2,400 crore, I think so there were certain apprehensions in mind, or we were not able to explain clearly that a few of the people thought that we are going to invest that money in day one. It's not going to happen. It is scattered over a period of time. All what we are trying to bring in is clarity for the next two years.
So sir, the corresponding capacity regarding INR 1,300 crore, what will be the corresponding capacity addition out of this 200 KM TPA?
So the major capacity additions would be on the OPVC side of it. As you know, currently we have added capacity for OPVC pipes in Bhopal.
We will now add the OPVC capability in Raipur, which should happen by the end of this year. And thereafter, we are looking for capacity addition in the south. So these are the three capacity additions most likely which are going to happen over the next 18-24 months' time. Or rather, 18 months' time. Let me put it this way.
And tonnage would be, sir, combined all these three?
OPVC may not be the tandem. May not be the right way of looking at the OPVC pipes, Vikash. When we have to talk about OPVC, we will have to talk about what sizes we are adding, how many machines we are adding, what is the linear meters we are adding.
I think so that will be the right metrics to discuss because TANED has no relevance at this point in time for a new talk from an OPVC perspective. I think so we can have a sort of an offline to explain to you more in detail that what does OPVC mean, how many lines we are going to add, by what timelines we are going to add, what it will add into the linear meters, what percentage of market share. I think so these are certain questions which we can apprise you offline.
Noted, sir. Sir, just one last question. If you could give us the sales EBITDA and PAT of Sintex and in guidance, what is the guidance for Sintex separately, it would be really helpful.
We have given a consolidated guidance. Sintex is embedded into that.
Just to give you the comfort that Sintex is absolutely a company which is very sharply focused internally. They have been doing exceedingly well in the last 12 months despite that the market has significantly calibrated downward. But I think so the way the Sintex has proven their mettle and have regained the market share and maintained their premium positioning, that's a commendable work they have done at this point in time. The company and this Sintex will continue to be in our focus. Their guidance, their revenue, their top line, and their earnings, both are embedded into the guidance what we have given. It will be difficult to split it out separately, but rest assured that it is absolutely a company which is on a growth path and on our focus.
Understood, sir. Thank you for the opportunity and all the best.
One second, Vikash, and I am sure I think so the CEO, Ashish, also may have a view to add to that. Ashish, please.
Thanks, Vipul. Vikash is calling. I think what we are trying to do is Sintex is a premium play. And as you would have heard us right now, we are driving premiumization. And premiumization is driving our growth. So we are obviously a profitable company and we're improving on profitability. But that's what we are doing. And everything which we are trying to do, we are trying to build a plus one distinct advantage. And I think that's the strategy which we would like to reinforce the market. And because we want to play not the TANED game, but we really want to play the value creation game.
Thank you. Noted, sir. So you are implying we are PAT positive as of now?
Yes.
Noted, sir. Thank you. Thank you.
Thank you. The next question comes from the line of Shailesh from B&K Securities. Please go ahead.
Hello, sir. This is Shailesh here. Thanks for the opportunity. Congratulations for the strong performance in these challenging times. We are entering the DSAW pipe segment in the U.S. along with setting up a coating facility. So could you provide insight on the market size of this product in the U.S.? Who are all the key players currently operating in this space? And what gives us the competitive edge or right to win in this market? Additionally, how do you view the longevity of demand for the DSAW pipes in the U.S.? So given that the planned CapEx exceeds 1,000 crore along with the associated working capital requirement, what kind of payback you are expecting?
Good morning, Shailesh, and thank you very much for joining this call and asking a great question. First and foremost, we have to clearly recognize that Welspun is one of the most dominant players in the oil and gas space, especially in the line pipe in the U.S. market. We have a formidable presence there at this point in time. Currently, we are producing spiral pipes. We are also producing HFIW pipes, and we enjoy almost close to a market share of more than 30%. The DSAW pipe story was a little different. We were not a player there because the DSAW pipes was not being produced. There was just one player who was producing that DSAW pipe, one big player and one small player, those who were producing that.
But largely, they also had a limited capability to produce, so largely, most of the DSAW pipe was coming as an import. Historically, this market is anything between close to 400-500 thousand tons on a year-on-year basis at this point in time, and it has been regularly for the last seven to eight years. When we did our study, we were very clear that the next five to seven years also look very, very buoyant, and the demand is going to be consistently around close to 400-500 thousand tons if it has a potential to go up if this LNG processing gets further expedited. So that gives us an opportunity to venture into that particular market. Now, when the new restrictions are coming in, there is the demand for made and built in America growing there, and no imports can happen for the DSAW pipe.
So here was an opportunity for someone like Welspun to go ahead and complete its portfolio. Typically, the portfolio of a pipe industry consists of a LSAW pipe, which is the HSAW pipe, spiral, and HFIW. So we have two assets there which are spiral and HFIW, which are one of the top performing assets. Only the LSAW was missing, and now this opportunity, this opportunity which came on the table, we analyze it, and we see a significant merit going into that. So we are very confident that we should be able to leverage and create a market share and get our market share for this particular facility. At this point in time, it will take around 15 odd months to set up this facility, and once that is being done, we see a clear market potential for the next five to seven years' time.
Very good to know this, sir. Currently, we generate an EBITDA of $230 per tonne in our U.S. operation. What kind of EBITDA do you expect? And what is the payback you are expecting, sir, in this DSAW pipe?
All that what it is clearly suggesting us that the payback could be anything between three to four years, less than four years.
Okay. Great, sir. So my second question, given the opportunity you highlighted in Saudi DI market and the expected oil supply situation in India next one to two years, where do you see better potential for ROCE? Would it be more prudent to scale up operation in Saudi rather than expanding further in India, especially since market dynamics there in Saudi appears more favorable? I would assume the ROCE from Saudi is actually stronger compared to India DI segment. Would it be fair assessment? What is your view on this?
I think so we are reading a little too much in the DIP India story at this point in time. I think so the last two quarters have been a little. We have seen a downward trend, but that was because of the cash flow issue. The demand, if you look at it, the demand looks very, very robust, number one. There's a lot of work which is still to be done under this Jal Jeevan Mission. I think so it's almost still 40% work is yet to be done. We are clearly seeing signs that the government is committed to get this work done. Only in the last one or two quarters, we have seen the slowdown in terms of cash flow. But in terms of demand, I don't think so, Shailesh, we are seeing anything going down.
So we continue to see that the requirement for the DI pipes over the next three, four years in India will remain strong. Saudi is a different story altogether. The logic going to Saudi has a different connotation altogether. Saudi is more to look at. There is a huge imports which are happening there, and it is our intent that we would like to be a local player in the Saudi market, and that is what the need of that particular market is. So I think so we'll have to distinctly look, evaluate Saudi separately and India separately, and for India, I don't see any reason of undue concern in days to come.
Okay. Good, sir. Sir, in OPVC, how many lines do you have added so far?
Currently, we have added two lines.
We have started with two lines at Bhopal, and we intend to add additional four lines in months to come, and that will be spread over at Raipur and somewhere in south. So our plan over the next 12 to 15 months' time is to add additional four lines in OPVC. We are very clear that we want to be a very dominant player into the OPVC market.
So each line will have 3,000 or 5,000 tons, sir?
Depends. Depends, Shailesh. Again, the size is what you are making. These lines are typically from anything from 80 millimeter to 260 millimeter. We have gone with a very optimized design of these lines where we are bringing capability for a small diameter, and also we are bringing capability for high diameter. So depending on how are we going to use it, the tonnages will keep on changing.
But what is more important is that we are going to have a fairly pan-India geographical presence to capture this market.
Okay. Okay. Great, sir. Thank you, sir. All the best.
Thank you, Shailesh.
Thank you. Ladies and gentlemen, if you wish to ask a question, please press star and one. The next question comes from the line of Shweta Dikshit from Systematix Group. Please go ahead.
Hi. Good morning. Thank you for the opportunity. Sir, could you just highlight all the setup expansions that are happening as of now in the U.S. and the timelines when they get commissioned along with the new capacity expansion that you've announced today? Also, your thoughts on the narrative.
Earlier, what the narrative was that these pipes, since they are not manufactured, since the capabilities within the U.S. are limited, that is why we were not expecting a lot of impact on imports. Now, that seems to have changed where we are now planning to set up this facility, so what has changed in these few months to decide to go and set up this capacity there?
So, Shweta, just to answer your first question that what are the expansions and what are the timelines, I will request if you go to my investor presentation and if you look at the slide 14 of 18 there, you will get all the answers there. It lists down completely all that what we are doing, what are the expenditure we are going to do, and what are the timelines for that.
So I think so that will give you a very fairly comprehensive picture around that. If you do not have it, I will ask Goutam here to share that investor presentation with you separately. So that will give you the answer, number one. Number two, with respect to the narrative for the LSAW pipe, we were not a LSAW pipe player in the U.S. market. We were always a spiral and HFIW player. And I have always maintained in my narratives that there will be no import of spiral pipes which will happen into U.S. And it was not happening. There was an import of LSAW pipes which was happening into the U.S. We were not commenting over it because we were not a player. We were supplying out of India and companies from Japan, companies from Europe were also supplying those pipes to the U.S. market.
I never said that I spoke about the LSAW pipe because we were not a domestic player. Now, with the change of scenario where there is a complete restriction which is happening for the imports of pipe, including the longitudinal pipe, it is a scenario something very similar to spiral pipes where now they are very clear that all the longitudinal pipes have to be made in America, as was the case or as is the case with the spiral pipes. This is a change which has happened. There is an opportunity. So there is a change which is happening. There is an opportunity which is emerging. We are one of the largest players in the line pipe sector. We want to maintain our leadership for a particular position in that particular market. I have a market share of more than 30%.
I have to protect my market share. Here is a brilliant opportunity which is coming up on the table. Who else other than Welspun will not like to capture this opportunity? And that is how we have gone ahead.
Understood, sir. So next question, I mean, what would be your consolidated CapEx guidance for FY 2026 and 2027? Annual CapEx, what is it likely to be versus INR 900 crores that was spent this year?
Shweta, again, I would say go back to the investment. It clearly shows that we have announced earlier, we have announced the CapEx of almost INR 5,500 crore rupees, almost six months to nine months back. We are within these CapEx only. And this CapEx is going to happen over the next two years.
So if we take INR 5,500 crore, INR 900 crore roughly being spent already, that still leaves us INR 4,500 crore.
So that brings us to a number of around INR 2,200 crores annually for the next two years. Is this calculation correct?
It may not be the right way of looking because CapEx are staggered over a period of time. They are more back-end loaded rather than front-end loaded. So, there is. We'll have to see a little more into detail. But from a pure arithmetical perspective, as what you are saying, may be right, may not be right, but I think so the right way of looking at that, there will be more back-end loaded rather than front-end loaded.
Okay. Understood. Thank you, sir. I'll come back and just look for more questions.
Sure. Thank you, Shweta.
Thank you. The next question comes from the line of Pujan Shah from Molecule Ventures. Please go ahead.
Can I do it?
Yes, please.
Yeah. Yeah. Yeah. So my first question would be on the OPVC side. So currently, we have been seeing that there is a good traction in this space as well as what we have made an agreement with Rollepaal. They are also planning to expand their capacities in India. Right now, what we have been eyeing in the initial months was that we wanted to plan for 10 lines for OPVC. So we have 10 lines. Hello?
Yeah. What did you say the last sentence, please?
Yeah. So what we have been planning to invest in the OPVC is 10 lines total. So right now, what we have been started is two lines in Bhopal and four lines will be coming in 12-15 months.
So, currently wanted to know what is the current capability of Rollepaal right now so that our aspiration to build and make the market share can be prominent enough in the coming years.
Mr. Shah, I don't think so you should have any doubt whatsoever in that, number one. Number two, Rollepaal has an exclusive understanding with Welspun. This year, we are planning to bring in six lines. Two lines have already come in. The other two are likely to come. And the third pair of two lines will come, let's say, by the start of the next year. So as I said earlier, we are going ahead with six lines planned at this point in time. Two of them are already commissioned. Two of them will get commissioned by the end of the year. And the next two will be somewhere towards the start of the next financial year.
So that's the roadmap we have clearly outlined at this point in time. Further, as I said earlier as well, Sintex plan is we are talking of a Sintex plan, staggered plan, and an investment in a calibrated manner over the next three to four years' time. So all what I'm clearly outlining today is that what we are going to do over the next two years' time. Over the next 12 months to 15 months' time, you would see at least six OPVC lines fully operational under Welspun build on a pan-India basis. And that should give us a sort of a significant leeway into and become a significant player in the domestic OPVC market.
So on a broader to summarize this thing, so there is no shortage from the suppliers. So Rollepaal can manufacture six lines in a year, right?
They can do that.
That's what they can do. That's what our understanding and agreement with them is.
Okay. Okay. Got it. And sir, on the contact supply right now, we have been opening up in Bhopal and second opportunity, we're focusing on Raipur. So Saurashtra market. So do you think this market is being so we can cater enough in that there would be a flow, enough tender flow will be opening up in this space? That's because right now, due to slowdown in Jal Jeevan, there is a bit of a lag which has been happening in the OPVC.
Mr. Shah, we have a strong reason that this flow and this demand will continue to be there. Please understand this OPVC market is in the small diameter. They are only anything from 80 millimeter, let's say, to up to 250 or 300 millimeter.
This is a market which has a very, very strong demand. JGM is an aberration at this point in time. As I said earlier too, the last two quarter issues of JGM cannot be pointed as the way forward of JGM. There is a lot of work. It is a mission on which Government of India is working. And we have seen in the past that when the Government of India takes anything as a project, as a mission, they bring it, they always complete it. And there is a lot of intrinsic socio-economic benefit which is coming out of this particular mission. We have all the reasons to believe and all the indications to believe that JGM will continue to stay strong for the next five to seven years' time. And in this, both OPVC as well as DIP will get completely consumed and interested.
Got it. And just wanted to understand the CapEx amount for the OPVC. So how many amount so what's the amount we have been planning to spend?
See, we have spent for six lines.
We have announced a comprehensive CapEx of INR 1,300 crore over the next two years. That's the way it looks like. We have already spent close to 300-odd crore rupees in the first year, which was in FY 2025. Between FY 2026 and 2027, we will be spending additional 1,000-odd crore rupees. And it will be largely on OPVC pipes. Also, there would be some upgradation and calibration of our water storage facilities and some SDP balancing lines. So it is a comprehensive CapEx which we are going to do. But largely, it is focused toward OPVC.
And my last question would be, so what's the expected margins we have been eyeing in this space?
What will be the EBITDA?
Margins we have been eyeing for OPVC?
Yeah. I mean, this business is definitely a mid-teen margin business for sure. And I am sure that we should be able to get that, if not exceed that.
Thank you.
We take the next question from the line of Resham Jain from DSP Asset Managers. Please go ahead.
Hi. Good morning, Mathur. First of all, congratulations and very good transparent communication, I feel. So congratulations on that as well. Sir, I have just one question on the US orders which we have won in the last two, three quarters, two quarters specifically. In the past two years back, we have seen that you have got advances also from the customer along with the orders. And the price variation, whatever has happened, is completely hedged in a way because of that.
But this time, when you received the order, we have actually not seen inventory going up along with it. So how are you looking at the overall because there will be volatility in the metal prices? So how are you hedging and how should we ensure that our margins will be range bound?
Good morning, Resham. Thank you very much for joining. With respect to these U.S. orders, there is no fundamental change as to what has happened the last year versus the order book what we have this year. These orders are all, first and foremost, confirmed orders. Number two, the steel is fully hedged. As we speak, the steel is being produced. And in a gradual manner, the steel, the inventory buildup will happen.
So in terms of any risk we are carrying on the steel, if that is your concern and that's that question, Resham, please be assured that there is no change in that. There is no risk on that.
Okay. Understood. So should one assume similar range bound kind of margins? Obviously, some volatility will obviously be there, but it will be range bound.
I am agnostic to volatility because I have already covered the steel. I am completely hedged on the steel. So my price is speaking, my steel is speaking, so I am completely covered. So there is nothing called volatility or uncertainty into the margins.
Understood. But you have not bought steel. It is mostly booked because last time, two years back, I remember we had bought also, and customer has given us advances also against that. It is not the case this time.
No, no. It is the same case, Resham. We have already booked the steel. As the steel will, the steel inventory will start building up, the customer will keep on paying for the steel. So there is no change in that. The steel is completely booked. All what you are looking is the inventory. Our inventories are a little lower at this point in time in comparison to the last year. But you will see over quarter on quarter, they will start getting building up. And they will be all customer-paid inventory. Be restricted on that.
Understood, sir. Very, very clear. And all the best. Thank you.
Thank you, Resham.
Thank you. The next question comes from the line of Deepak Lalwani from Unifi Capital. Please go ahead.
Hello, sir. Congrats on a good set of numbers. I had a question on the DI pipes in India.
Although we know that Jal Jeevan is a long-term vision, I just wanted some short-term insight on the business. So the cash crunch and the inventory in the system, will it impact execution, order inflow, and the EBITDA spread that we make in this business? This is a short-term statement that I want from you, and also, the second thing is that you rolled back your CapEx in the DI pipe segment, so is it a situation currently of oversupply and less demand, so yeah, these two aspects.
Deepak, let me take your second question, the first. I don't know when you mentioned that we have rolled back our CapEx on DIP. We have not. Actually, we had gone ahead with the DIP expansion, and that expansion stands completed, and it is currently under trials at this point in time.
So we have not rolled back any CapEx expansion on DI pipes, number one, because we fundamentally strongly believe into this particular business, number one. Number two, coming back to the pricing part of it, at this point in time, we have, as I said, we have close to 350,000 tons of a confirmed order book what we have, number one. Pricing is a factor of the market. At this point in time, is full 350,000 tons booked at the same price? The answer is no. They have been booked at different price, different time at a different price levels, number one.
Number two, moving forward, if we are seeing that there is, to the extent your point is right, Deepak, that we have seen that correspondingly what was in quarter one of the last year, the pricing prevalent at that point in time versus the pricing prevalent in quarter one of FY 2026, there is a difference. The prices have calibrated downward, so has the cost. So at the end of the day, the margins, the EBITDA margins or the contribution margins are very well protected even at this point in time. So we are seeing, if you see, I'm sure you are tracking the global cues with respect to iron ore and the coal and which are the two major factors deciding the pricing. They have also got significantly calibrated over from quarter one of the last year versus the quarter one of this year.
In terms of margins, I think so we have been able to protect our margins, number one. Number two, in terms of demand, we are very, very buoyant about the demand. This is a project business, cyclical business. We all know that. One quarter, two quarter, here and there, demand can be low. There could be some cash flow challenges because at the end of the day, it is government buy. But then, is it creating any potential threat? I don't think so. I believe that the industry with whom we are also a part of it, and when we there, I think so the industry per se feels buoyant about it.
Understood. Got it. Secondly, on Sintex, if you can give out the revenue and EBITDA that we generated this year, that would be helpful, sir.
I said, Deepak, our top line was close to INR 600 crore at this for the Sintex. And this entails EBITDA. This entails business from the water storage tanks, and it is completely assimilated into our consolidated EBITDA. But I think so I will advise my people to have an offline discussion with you and to give you a little more granular details about this piece. Goutam, can you please get in touch and close it out?
Thank you.
Thank you, Deepak.
Thank you. We take the next question from the line of Ankit from Marketcord Research Private Limited. Please go ahead
Sir, congratulations on the set of numbers. I have a few questions. What percentage of the production you are doing in the US, right, is dependent on imports of the raw material?
Right now, for the confirmed order book, you are talking, Ankit?
Just we can take an example of Q4 and talk about it. What was the production? What was linked to import?
There is no import. Zero. It is all domestic steel melt and produced in America. And the pipes made in America and pipes supplied in America. So there is nothing which is going to get imported.
You're talking about raw material, right?
Yes. Your question was about raw material only, right?
Yes, that's correct. That's correct. Okay. Next question is, sir, what percent of volumes and EBITDA in Q4, right, was contributed by the production in USA? Can you give some flavor on that?
I don't think so. That will be the right way of looking at things. We have always maintained that this is not a company to be monitored on a. It's a project-based company. It has nothing to be monitored on a month-on-month basis, quarter-on-quarter basis.
The quarter revenues and the quarter EBITDAs are a factor of your product mix. What are you producing at that point in time? It is a blend of some very, very profitable orders versus some low marginal contribution orders, some medium profitability orders. So I don't think so that will be the right way of looking at things. I think so we should be focusing more on a quarter basis and more on a half-yearly basis and take my word on the guidance side of it, please, for the yearly guidance side of it. It will be very difficult to talk on a month-on-month basis.
Sure. One last question is, sir, I see that you have export demand increasing in markets like Saudi Arabia and Qatar as well. The markets in Qatar, do you see as a one-time trend or you see as a long-term trend in Qatar?
Which product are you talking about, Ankit? Please understand, Welspun is now a conglomerate. For me, markets are for LSAW pipes. The market is for me for SS pipes. The market is for me for DI pipes. The market is for me for OPVC pipes. So help me understand, clarify which particular segment of the business you are asking for.
LSAW pipe.
Yes. So on the LSAW pipe, I think so Qatar, if you look at their potential and if you look at their roadmap, I think so they have very clearly articulated a roadmap for the next 10 years that what is their gas potential at this point in time and where do they want to reach. I think so it's a long-term 10-year investment plan they have put up on the table. And I believe that this demand for Qatar will be there on a sustained basis.
That's my very strong understanding of the whole subject.
Okay. Thank you, sir.
Thank you, Ankit.
Thank you. Ladies and gentlemen, due to time constraint, that was the last question. I now hand the conference over to the management for their closing comments.
So once again, thank you, gentlemen, for joining us for this call today. I hope that we would have been able to bring almost full clarity and transparency on the subject matter. And this is at Welspun. This is one of our core values which we believe in that you are our partners and we have to be absolutely fair and transparent to them. I think so we are living up to your expectation.
But having said that, if you still have any further queries, any other questions, please feel free to reach out to the CFO, to our IR team, and they will be more than happy to assist you. Just to conclude, I just wanted to give you the assurance and the comfort that this company is now poised to sort of it's going to a different league, a different orbit. The Welspun Corp is now going to be it's a new normal for Welspun Corp, which you have seen emerging over a period of time. Here on, when we will end up this year, by that time, we will have two new facilities which would have come up on stream, and we would see their earnings and their EBITDAs also coming up into our play.
So the next three-to-five years, we are building this organization from one level to another, and it is a very exciting journey, and gentlemen, your trust and your confidence in us will help us to scale new heights. I thank you very much for joining me today, and thank you very much.
Thank you. On behalf of JM Financial Institutional Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.