Jefferies sees 27% upside for the world’s largest welded line pipe maker — 3 growth triggers

Pipes don’t usually make headlines. But one pipe maker just did. Global brokerage Jefferies has given a ‘Buy’ rating on Welspun Corp, with a price target of Rs 3,250. That is a possible 27% upside from where the stock trades currently.

Jefferies sees capacity expansion, a large order book and a rising share of overseas business supporting earnings over the next three years.

What is Jefferies seeing in Welspun Corp that could drive the next leg of growth? Let’s take a look –

Welspun Corp is the world’s largest welded line pipe manufacturer, with a total pipe capacity of 2.4 million tonnes per annum. Around half of its EBITDA came from the US in FY26, with the rest coming from India.

Jefferies expects the US energy infrastructure cycle to remain strong for several years. Rising liquefied natural gas (LNG) exports, higher electricity demand from data centres and increasing gas output from the Permian Basin are all supporting investment.

The brokerage said, “US energy infrastructure is in a multi-year investment phase.” Welspun already has around 30% market share in the US, with local manufacturing facilities and capacity expansion underway.

The second opportunity is Saudi Arabia. The country is increasing spending on gas transmission and water infrastructure under its Vision 2030 programme. Jefferies believes growing local-content requirements could further support manufacturers with a domestic presence.

Welspun Corp has a 22% stake in Saudi-based pipe maker East Pipes Integrated Company (EPIC) and is also building 600,000 tonnes per annum of capacity through a wholly owned subsidiary in the country.

Jefferies said, “Big opportunity in Saudi Arabia.” The brokerage believes this overseas expansion can increase Welspun’s contribution from higher-margin markets over time.

Jefferies expects Welspun Corp to deliver 17% volume growth and around 32-33% EBITDA and earnings per share (EPS) growth annually on a compounded basis between FY26-FY29.

A major support is its Rs 42,100 crore order book, which is around 2.5 times FY26 revenue.The brokerage expects capacity in the US and Saudi Arabia to expand by around 51%, while overseas operations contribute a larger share of profits.

It said, “We expect strong 33% EPS CAGR over FY26-29E led by capacity expansions, robust order book and improving mix, along with rising net cash and 23% ROE.” Also, Jefferies is more cautious on the near-term outlook. Slower project execution and higher competition have affected demand visibility and margins compared with the US market.

Jefferies has set its target price at Rs 3,250, based on 17 times September 2028 estimated EV/EBITDA. The brokerage believes the valuation is reasonable given the expected earnings growth, strong order book and high return on equity (ROE).

It said, “Initiate at Buy with a Rs3,250 PT, based on 17x Sep-28E EV/EBITDA, similar to its current 1-year forward multiple (potential 27% upside).”Jefferies expects net cash to increase from Rs 1,400 crore at the end of FY26 to Rs 3,900 crore by FY29 and ROE to stay around 22-23%.