1. At a Glance
Electrosteel Castings is one of India’s oldest DI pipe manufacturers—literally laying the underground plumbing for India’s water dreams. With 30%+ profit CAGR over 5 years, rising exports, and a strategic European acquisition, the company is evolving… but the market’s not gushing yet.
2. Introduction with Hook
If water is life, Electrosteel is the rusty steel straw we’re sipping it through—just a 70-year-old company helping India pipe dreams into reality. From ductile iron pipes to Italian takeovers, it’s doing everything but going viral on Instagram.
- 32% profit CAGR over 5 years
- ROCE up to 16% in FY24 before slipping
- Stock -36% YoY—investor tears now flowing better than municipal supply
3. Business Model (WTF Do They Even Do?)
Core Biz:
- Ductile Iron Pipes & Fittings (DI/DIF): Used in water transmission, sanitation, and industrial water supply
- Pig Iron: Used for backward integration, steel casting, and external sales
- Export Focus: Present in 70+ countries across Middle East, Africa, Europe, and Latin America
New Biz:
- Recently acquired T.I.S. Services S.p.A. (Italy) for Euro 15 million
- Strategic focus: Access to EU clients, premium-grade fittings, and tech
Clients:
Govt water boards, smart cities, EPCs, Jal Jeevan Mission contractors, municipalities
4. Financials Overview
Key Metrics (FY25):
| Metric | Value |
|---|---|
| Revenue | ₹7,320 Cr |
| Net Profit | ₹710 Cr |
| EBITDA Margin | 14% |
| ROCE | 13% |
| ROE | 13% |
| Debt | ₹2,125 Cr |
| EPS (Diluted) | ₹11.48 |
5-Year Trends:
- Sales CAGR: 22%
- Profit CAGR: 32%
- ROCE doubled from FY20’s 6%
However, FY25 saw pressure on margins and Q4 was… not cute.
5. Valuation
Current Price: ₹117
P/E: 10.2x
P/B: 1.24x
Dividend Yield: 1.2%
Valuation Peers:
| Company | P/E | ROCE |
|---|---|---|
| APL Apollo | 61 | 22.8% |
| Welspun Corp | 20 | 21.2% |
| Electrosteel | 10 | 13.2% |
| Jindal Saw | 9.9 | 19.4% |
Fair Value Estimate:
| Method | Range ₹ |
|---|---|
| DCF (base) | 125 – 150 |
| PE (12x on FY26E EPS ₹13) | 140 – 155 |
| EV/EBITDA (7x) | 135 – 145 |
EduVal™ Range: ₹130 – ₹150
Undervalued? Possibly. Just don’t expect it to burst through resistance like your bathroom pipe.
6. What’s Cooking – News, Triggers, Drama
- Acquisition of TIS Italy: Entry into EU premium fittings market
- Q4 Slowdown: Margins dropped to 9% in Mar ’25 vs 14–18% previous quarters
- Maintenance Shutdown: 10-day Khardah works halt in June ’25
- Volume Drag: Water infra projects facing execution lag post elections
- Capex Tailwinds: Increased orders expected from Jal Jeevan Mission & Smart Cities 2.0
If it weren’t for steel prices and Italian espresso-fueled M&A, the chart would look dryer than a Rajasthan canal.
7. Balance Sheet
| Item | FY25 (₹ Cr) |
|---|---|
| Equity Share Capital | 62 |
| Reserves | 5,720 |
| Total Borrowings | 2,125 |
| Other Liabilities | 1,788 |
| Fixed Assets + CWIP | 4,351 |
| Total Assets | 9,695 |
Key Points:
- D/E ratio ~0.37 (manageable)
- Solid reserve build-up
- High asset base (heavy industry = heavy capex)
8. Cash Flow – Sab Number Game Hai
| Cash Flow Item | FY25 (₹ Cr) |
|---|---|
| CFO (Operating) | 480 |
| CFI (Investing) | -142 |
| CFF (Financing) | -454 |
| Net Cash Flow | -116 |
Insights:
- Consistent cash generation post-FY22
- Financing outflows due to debt repayment
- Capex (Italian buy + capacity upgrade) absorbing investment cash
9. Ratios – Sexy or Stressy?
| Ratio | FY25 | FY24 | FY23 |
|---|---|---|---|
| ROCE | 13% | 16% | 10% |
| ROE | 13% | 13% | 12% |
| OPM | 14% | 16% | 10% |
| Net Profit Margin | 9.7% | 9.9% | 4.3% |
| D/E | 0.37 | 0.46 | 0.5 |
Verdict:
Solid. Slight drop in ROCE from FY24, but healthy profitability. The pipe may be dented, but it ain’t leaking.
10. P&L Breakdown – Show Me the Money
| Year | Revenue ₹ Cr | EBITDA ₹ Cr | PAT ₹ Cr | EPS ₹ | Dividend % |
|---|---|---|---|---|---|
| FY23 | 7,276 | 746 | 316 | 5.31 | 17% |
| FY24 | 7,478 | 1,204 | 740 | 11.97 | 12% |
| FY25 | 7,320 | 1,036 | 710 | 11.48 | 12% |
Takeaway:
FY24 was peak margin year. FY25 cooled off, but still solid. EPS remains stable. Dividend flatlined but consistent.
11. Peer Comparison
| Company | P/E | ROCE % | OPM % | Revenue (Cr) | PAT (Cr) | Mcap (Cr) |
|---|---|---|---|---|---|---|
| APL Apollo | 61 | 22.8 | 5.8 | 20,689 | 757 | 46,235 |
| Welspun Corp | 20 | 21.2 | 12 | 13,977 | 1,206 | 24,361 |
| Jindal Saw | 9.9 | 19.4 | 16.5 | 20,828 | 1,473 | 14,628 |
| Electrosteel Cast. | 10.2 | 13.2 | 14 | 7,320 | 710 | 7,214 |
Comment:
Valuation is cheap. But margins, scale, and investor buzz still trail the big names.
12. Miscellaneous – Shareholding, Promoters
| Category | Jun ’25 |
|---|---|
| Promoter | 46.21% |
| FII | 20.27% |
| DII | 0.20% |
| Public | 33.08% |
Trend:
FII love = strong. DII = ghosted. Promoters haven’t budged. Retail increasing.
Fun Fact:
Over 1.8 lakh shareholders now! From pipe manufacturers to investor darlings—what a journey.
13. EduInvesting Verdict™
Electrosteel Castings is an old-school infrastructure enabler undergoing a global glow-up. Despite temporary blips (margin pressure, muted Q4), the business has legs—literally—running across 70 countries. It’s not your flashy midcap, but it’s consistent, profitable, and increasingly export-driven.
The Italian acquisition adds European class to its rustic Indian brass. And at 10x earnings with ₹7,000+ Cr revenue, it feels like the market isn’t fully appreciating the value. Especially when water infra spending in India is only going up from here.
EduNote™:
This pipe may not burst with excitement, but it’s quietly filling buckets of shareholder wealth.
Metadata
– Written by EduInvesting Analyst Team | 18 July 2025
– Tags: Electrosteel Castings, DI Pipes, Water Infra, Export Stocks, Value Pick, Pipe Stocks
