Welpsun Enterprises Profit Likely To Normalise In Next Two Quarters: MD

Welspun Enterprises' Managing Director Sandeep Garg, referring to the drop in earnings for the second quarter of the current financial year, said he expects net profit to stabilise over the next two quarters.

Net profit of Welspun Enterprises Ltd. slipped 11% year-on-year to Rs 62 crore in Q2 against Rs 69 crore in the same period last year. Revenue grew 21% year-on-year to Rs 838 crore compared to Rs 693 crore in Q2 of last fiscal.

On the decline in the bottom line, Garg told NDTV Profit it was caused by the company’s discontinued operations. “Whatever drop you see in profits is because of the discontinued operations. If I were to look at H1FY25, the revenue has grown at the consolidated level at 25% and Ebitda has grown at 20%,” he said.

“The profit from the discontinued operations is notional because we are holding the company for sale purposes, once the approvals are in place. It is notional. It will come back once the equities are sold in that company,” he asserted.

According to Garg, it may take up to two quarters for the profit to normalise.

The company's Ebitda margin narrowed by 82 bps to 17.9% from 18.7% in the year-ago period. Garg said that the drop in margin was due to seasonal factors and is unlikely to impact the full year's guidance.

“The overall guidance for the year is about 16–17% at the consolidated level. Seasonality plays its own role because in the Q2 there is some drop because revenues are slightly less,” he said.

Revenue from projects is another factor that plays a role in deciding margins, the top executive noted. “The other thing is that it also depends on which project is churning the maximum revenue in that quarter because each project has differentiated Ebitda levels.”

In the next six months, Welspun Enterprises is targeting orders up to Rs 7,000 crore. “We expect that in the period to come we would be adding about Rs 4,000 crore to Rs 7,000 crore of order book, depending on how the government takes decisions. Anything between Rs 4,000–7,000 crore we will be targeting in the orders, going forward in the next six months,” Garg said.

The stock closed 4.34% higher at Rs 503.55 a piece on the NSE on Wednesday.