Sustaining Margin Expansion In Upcoming Quarters May Be Tough, Says Welspun
Welspun Corp’s Q2 profit grows, aided by better operational efficiency.
Welspun Corp. Ltd. is expecting margins to be slack in upcoming quarters, S Krishnan, its chief financial officer, told BloombergQuint, despite successful execution of orders and improved operational efficiency that turned it profitable last quarter.
The net profit of the U.S.-based Welspun Group’s flagship company grew to Rs 41.76 crore from a loss of Rs 33.64 crore in the year-ago period, said the company in an exchange filing today. A 9 percent reduction in finance cost aided the bottomline growth.
Earnings before interest, tax, depreciation and amortisation surged 168.2 percent to Rs 185.5 crore, while the margin expanded 9.2 percent from 5.9 percent in the year- ago period.
Krishnan said that despite a satisfactory performance in the second quarter, some slackening in the upcoming quarter margins is quite possible.
Welspun is a project-driven company having a lifespan of over a financial year, and margins are a function of the orders we transact in the quarter that do not remain uniform. The first half of the current year has been front-ended, but the second half may not be equally order-heavy.S Krishnan, Chief Financial Officer, Welspun Corp.
Krishnan added that the company made an advance payment of Rs 1,000 crore towards debt repayment from March-September that has led to a significant reduction in their overall cost, and strengthened the balance sheet of the company.
Going ahead, the management expects a significant pickup in their order book in financial year 2019, led by orders pouring in from North America, India and the MENA region, encompassing the Middle-East and North Africa.
Other Highlights:
- Revenue for the quarter surged 72 percent year-on-year to Rs 2,006 crore.
- A 64 percent YoY decline in ‘other expenses’ to Rs 342 crore aided operational efficiency.
- Finance cost went down by 9 percent to Rs 53.50 crore.