WPIL’s June qtr numbers were very decent & maybe a precursor to better things to come going forward. The June qtr has traditionally been a weak one for the Co., & the numbers should also be seen from that perspective. Sales came in at 299 crs, a growth of about 33% over Q1 last year. More importantly, the higher operating margins of 17% vis-a-vis 11% YOY, means that the Co. is in line to improve upon the 18% OP margins of 2021-22. The MD, at the AGM was pretty confident of maintaining margins of about 15% on the product (Pumps) business. The margins in the project division are expected to be much higher!
We are talking of a Co. which can be termed as an Indian multinational, with a number of profitable subsidiaries across the globe! These foreign subsidiaries are in no way any less profitable as is the case of a number of other Indian Co.’s having subsidiaries abroad that bring down the consolidated numbers. In fact, the Subsidiaries are helping improve operating margins! These subsidiaries are supplying pumps across industries/ sectors like Oil & Gas, Nuclear (recognized as Green Power & hence being given a major thrust in the developed world.), irrigation etc.
Valuations: For a multinational Co., enjoying high operating margins across the globe, with more than an acceptable RoCE in excess of 20%, expected to generate profits of about 110-120 crs, a current market cap of 1270 crs leaves enough room for growth in terms of market cap as well. I see growth both in earnings as well as the multiple which as we know is a deadly combination!!
The MD also mentioned that having reached a critical mass in terms of operations, it now made sense to get listed on the NSE, so a listing on NSE is very much on the cards. Attaching the June qte numbers. Also, the Annual Report, which makes for interesting reading!
Disc: Invested
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