Mutlibagger Stock: This LIC-backed pipe manufacturer hits 12-year high on Monday – what lead the surge?

Multibagger shares: Shares of Welspun Corp Limited touch a 12-year high of Rs 271.95 per share, after rising around 10 percent on the BSE intraday on Monday. The multi-bag stock, which has gained more than 118 percent in a year, closed nearly 8 percent higher at Rs 266.75 per share on the BSE.

Life Insurance Corporation of India (LIC), which is also considered a domestic institutional investor, held 1,53,62,312 equity shares or 5.89 percent stake in Welspun Corp, according to the company’s June holding pattern available on the BSE.

Welspun Corp’s share price jumped on winning a major order for a carbon capture pipeline project in the United States, the company said in a regulatory filing.

“This order is for the supply of 785 miles (1,256 KM) or 100,000 MT (approximately) of high frequency induction welding (HFIW) pipe and would be used to transport captured carbon dioxide, Welspun Corp said in a exchange presentation on Saturday.

He added that the pipelines will be produced at the Little Rock plant in the US and will run the same in FY23-24.

Kotak Securities said the situation has improved on the ground for the pipeline business with oil prices recovering from their lows to over US$90/barrel. Near-term profitability would be driven by local businesses, while US operations are also contributing significantly from FY24E, he added.

Diversifying into the ductile iron segment, contribution from the steel business and order fulfillment in India would drive earnings in the near term, said Kotak Securities, which expects a significant contribution from the US business to from fiscal year 24, which would boost earnings thereafter.

Hence, the domestic brokerage believes that profitability will improve for Welspun in the short to medium term and anticipates strong cash flow generation from FY24 onwards.

Welspun Corp is a flagship company of the Welspun Group and a pipe manufacturer capable of manufacturing longitudinal (LSAW), spiral (HSAW) and HFERW / HFI (ERW) pipes.

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