Welspun Corp- A Potential Multibagger

October 30, 2020

l

Strategic Alpha


Welspun Corp Ltd is among the Largest Welded Line Pipe manufacturing companies in the world. Welded Pipe capacity:- 2.55 MMTPA making us the largest player in the segment, manufacturing and supplying to some of the most critical pipelines in the world from its plants in India, Kingdom of Saudi Arabia, and the USA.

The company has to its credentials supplies to world’s one of the deepest pipeline project (Independence Trail in the Gulf of Mexico), one of the highest pipeline project (Peru LNG), one of the longest pipeline (Canada to the US) and the project involving supplies of one of the heaviest pipe  (56 inch X 1.34inch in the Persian Gulf). WCL has a list of esteemed clientele which includes Chevron, DOW, Elpaso, Enterprise, Exxon Mobil, GAIL, Hunt Oil, Kinder Morgan, PTTEP, Qatar Petroleum, Reliance, Saudi Aramco, Shell, Statoil, TOTAL, and TransCanada to name a few.
For More Info Visit:- https://www.welspuncorp.com/

NUMBERS THE LATEST:-

Market Cap:  2965 Cr Apx.         Book Value: 125 Apx
Promoter holding: 48.22 %          Sales FY20: 9957 Cr
FY20 Net Profit: 563 Cr.              CMP on 29ThOCT 2020: Rs 114

 

POSITIVES:-

  1. Debt to Equity is 0.11 Times’, Which is one of the lowest in the industry
  2. Rich Experience of over 25 Years in the Industry
  3. One of the Largest Installed Capacity in India.

INTERESTING INFO:-

  1. EPS Grown at Scorching Pace in Past 3 Years
  2. Debt Levels Came Down Sharply in Past 3 Years
  3. Significant Improvement on Return on Equity and Return on Capital Employed.
  4. Company Achieved highest Sales Volumes in FY20
  5. Long-Standing Relationships with clients act as an entry barrier.
  6. Welspun Stock has been a Laggard for the past 10 Years and is having a long consolidation Range, I like Such Companies where past performance is flat.

Welspun Long Consolidation on Charts from Past 10 years, Laggard to become a Leader

NEGATIVES/POSSIBLE RISKS:-

  1. Steel price volatility can impact the performance of the company.
  2.  Low crude prices can defer investments in the oil and gas industry.
  3. Welspun Corp was barred from trading on the stock exchanges for allegedly indulging in fraudulent and unfair trade practices, Later SEBI Lifted the Ban. Any such news in the Future we should be extra cautious and take actions accordingly.

MY TAKE:-

Welspun Corp which is the Largest Player in Pipes in India with 25LTPA Capacity has reduced its debt to 0.11 times Equity, which impressed me a lot. The company is having a strong order book giving visibility in earnings for at least the next 12 months. Welspun is trading at a Cheap PE of 5 Times Earnings FY21E and on Book Value Front too 1 Times BV, I consider it to be undervalued. The business has Hugh potential for its business looking at Namami Gange, Nal Se Jal, Oil and Gas and Recently company has announced its foray into DI Pipes, which I think they have taken the right decision at the right time when Debt to Equity is at Lowest. These all things make Welspun an Excellent Opportunity.

Welspun Corp is thus a Long Term wealth-creating opportunity, heads I win, tails I don’t lose much. Time will only tell how much money we have made here. With enough patience and conviction, we will be able to see levels of 200, 300, 400,500

Technical Front:-

Welspun Corp is Poised for a Breakout above 121 on Daily Close, Once Breakout happens, Stock is likely to move till 150+ for short term and 220 in Medium Term. CMP 114 where stock is moving higher to make Higher top Higher Bottom in the Recent Channel Zone from 2 Months Suggest that Immediate breakout is highly probable. Time Period for Short term Move can be 30-40 Days once breakout Happens.
Please Find the below Business Update and Investor Presentation File Explaining in Detail Further about the Opportunity. Once the Page is Opened, Please click once again on the link inside the page, one PDF will be opened
Welspun invt ppt

Important NotePotential multi-baggers are those stocks that have the potential to give 100 – 500% profits. Obviously, such returns take time. Probably 3 – 4 years or more. Short-term volatility is the reality of the stock market and that will always happen. Short-term movements(upside and downside) are impossible to predict. Only invest funds that you will not need for the next 3 – 4 years. As long as you buy a stock for the right reason and are convinced about the future prospects of the company, there is no need to worry if the share price goes down and stays down for a period of time after you buy; provided you have followed the cardinal stock market mantra BUY LOW.

Join Me On My Telegram Channel Where I Share Much More Value Adding Knowledge Of Investing/ Trading: Click Here

Also, Don’t Forget To Follow Us On Our Social Media Accounts:

Facebook: https://www.facebook.com/strategicalpha/

Instagram: https://www.instagram.com/strategicalpha/

Twitter: https://twitter.com/strategic_alpha?lang=en

YouTube: https://bit.ly/2IIqztO

Very important note: The objective of this blog is to share knowledge and info about multi-bagger ideas/opportunities. Neither is this trading website nor an analyst website nor a Buy/Sell call website. For stock market success, always do your homework, own analysis, and make your own decisions.

           For commercial collaboration and Mentorship contact via contact@strategicalpha.in or call Mr.Ganesh at 9922112692

The author of the blog Mr.Suyog Dhavan is a Full-time Investor / Value Trader and Value investing/Trading Mentor. His style of Investing is inspired by Mohnish Pabrai, Peter Lynch, and Porinju Veliath. He is the founder of Strategic Alpha Wealth, A Premier stock market mentorship firm with a mission to touch the lives of 1Lakh people through its mentorship program.

0 Comments

Mentees

Learn more about us

Strategic Alpha is on a mission to change the wealth lives of over 1 Lakh people through mentorship based fortune creating investing model.

We Believe wealth is the ability to fully experience life, so we are on the mission to give you this experience of life.

Monthly Blog Readers

%d bloggers like this: