Summary
Welspun Enterprises Limited - Q3 FY26 Earnings Call Summary Thursday, February 05, 2026 4:00 PM
Event Participants
Executives 6 Abhishek Chaudhary, Hardik Dhebar, Lalit Jain, Sandeep Garg, Sangeeta Tripathi, Saurin Patel
Analysts 5 Apeksha Bajaj, Riddhesh Gandhi, Radha Agarwalla, Sailesh Raja, Sanjay Shah, Sarvesh Gupta, Vaibhav Shah
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Consolidated Income | ₹806 crores | -12% YoY; impacted by timing delays in clearances, extended monsoon, and slow project awards. |
| Consolidated EBITDA | ₹174 crores | -4% YoY; resilient performance despite lower revenue due to operational efficiencies. |
| EBITDA Margin | 21.6% | +200 bps YoY; margin expansion driven by cost discipline and conservative contingency releases. |
| Consolidated PAT | ₹31 crores | -62% YoY; significantly impacted by a ₹49 crore exceptional write-off in the oil & gas segment. |
| Adjusted PAT | ₹80 crores | +4% YoY; excludes the one-time ₹49 crore exceptional loss. |
| Order Book | ₹15,000 crores | Includes ₹5,400 crores in O&M; excludes the ₹7,300 crore Pune-Shirur BOT project (L1 status). |
| Cash Reserves | ₹1,400 crores | Consolidated liquidity remains strong; standalone cash at ₹1,273 crores. |
| Net Debt | ₹466 crores | Consolidated basis; debt expected to reduce by ₹800 crores post-asset monetization in FY27. |
Geographic & Segment Commentary
- Transport: Contributed ₹1,065 crores (44% of 9M revenue). The segment saw a 19% decline due to the completion of older projects and delays in awarding the Pune-Shirur project. Management expects PCOD-1 for the SNRP project in Q4 FY26.
- Water & Tunnelling: Contributed ₹764 crores (Water) and ₹587 crores (Tunnelling). Tunnelling/rehabilitation grew 39% YoY, driven by Welspun Michigan, while Water declined 15% due to slow progress in UP Jal Jeevan Mission (JJM) schemes.
- Oil & Gas: Recorded a ₹49 crore write-off for the Kutch Block. Strategy has shifted to three adjacent offshore blocks (Mumbai B-9, C37) with 1.1 Tcf gas potential, focusing on utilizing existing ONGC infrastructure to minimize capex.
Company-Specific & Strategic Commentary
- Asset Monetization: Received the first annuity for the Aunta-Simaria Road project. Monetization is targeted for Q1/Q2 FY27, which will offload ₹800 crores of debt and realize equity returns expected to exceed 1.5x book value.
- Digital Transformation: Implementing SAP S/4HANA RISE and BIM (Building Information Modeling) for quantity estimation. Commenced digitization of supply chain management and e-governance solutions to enhance maturity.
- Smart Ops Vertical: Launched a technology-led “Smart Ops” for distributed water treatment. Currently five projects are live (Varanasi, Guwahati, Pandharpur) with five more expected in the next 6-8 months.
- Capital Raise: Issued 1.9 crore warrants at ₹525/share, aggregating ₹1,000 crores. Received ₹250 crores upfront in Q3, with the remainder due over 18 months to fund growth.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| FY26 Revenue | ₹3,600 - ₹3,700 crores | Revised downward from ₹4,000 crores due to clearance delays and monsoon impacts. |
| FY26 Order Book | ₹20,000+ crores | Anticipates formal Letter of Award for the ₹7,300 crore Pune-Shirur project within Q4. |
| Revenue Growth | ~20% for FY27 | Driven by a lower FY26 base and the commencement of major projects like Panjrapur and Pune-Shirur. |
| EBITDA Margin | 18% - 19% (Long-term) | Management maintains a conservative long-term target despite currently exceeding 21%. |
Risks & Constraints
| Risk | Context |
|---|---|
| Statutory/Local Delays | The Dharavi-Ghatkopar Tunnel (DGT) faced local disturbances and CRZ clearance delays, shifting major execution to Q4 FY26. |
| Counterparty Risk | Profit recognition for UP JJM projects (₹600 crore order book) is being deferred until cash flow clarity improves at the government level. |
| Execution High-Bar | Guidance for Q4 FY26 requires ~₹1,200 crore revenue (a 50% QoQ jump), relying on immediate project kick-offs and completions. |
Q&A Highlights
Execution Delays
- Question: What caused the significant Q3 revenue softness? (Sanjay Shah)
- Answer: Combined impact of extended monsoons, local disturbances at the DGT site during elections, and the delay in the Pune-Shirur LOA. Management confirmed clearance for Ghatkopar work is now in hand (Sandeep Garg).
UP Jal Jeevan Mission
- Question: What is the status of the UP JJM order book and receivables? (Vaibhav Shah)
- Answer: Order book is ~₹600 crores with ₹300 crores in receivables. Execution continues, but profits are not being recognized yet as a “prudent practice” until payment traction improves (Sandeep Garg).
Oil & Gas Strategy
- Question: Will there be further write-offs in the oil and gas segment? (Radha Agarwalla)
- Answer: No further write-offs anticipated for the core Mumbai B-9 and C37 blocks. The current write-off was for a non-core block operated by ONGC that was never in the primary business plan (Sandeep Garg/Lalit Jain).
O&M Outlook
- Question: What is the contribution of the ₹5,400 crore O&M order book? (Sanjay Shah)
- Answer: Major contribution starts in 2027 post-Dharavi completion. It should provide ~₹200 crores revenue annually with stable margins over 15 years, offering long-term cash flow visibility (Sandeep Garg).
Key Takeaway
Welspun Enterprises reported a transitional Q3 FY26, marked by a 12% revenue decline to ₹806 crores due to a “triple-hit” of monsoon extensions, statutory clearance delays for the Dharavi-Ghatkopar Tunnel, and a delayed LOA for the Pune-Shirur project. Despite these hurdles, consolidated EBITDA margins expanded to 21.6% through operational efficiency and conservative contingency management. Strategically, the company is pivoting toward a higher-margin, technology-led water and tunnelling mix, now representing over 50% of the 9M revenue. While FY26 revenue guidance was lowered to ₹3,600-3,700 crores, the order book is poised to exceed ₹20,000 crores following the imminent Pune-Shirur award. The company remains well-capitalized with ₹1,400 crores in cash and a clear path to de-leveraging through asset monetization in early FY27. Investors should monitor the Q4 execution ramp-up and the resolution of payment cycles in the UP JJM segment.
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