1. At a Glance
Esab India isn’t just welding metal—it’s welding together insane financial ratios that make analysts scratch their helmets. With aROCE of 90.8%andROE of 59.3%, this company produces more sparks on its balance sheet than its arc welding machines. But wait—the stock trades at aP/E of 144and74× book value, which means you’re paying Ferrari money for a tractor. Still, investors keep queuing up because, apparently, nothing sells like “almost debt-free industrial company” sprinkled with global MNC parentage.
2. Introduction
Imagine a company that entered India in the 1980s by gobbling up smaller welding businesses like Pac-Man. Fast forward to today, and Esab India Ltd is the godfather of welding consumables, equipment, automation, and robotics. If something in India is being welded—whether it’s pipelines, auto parts, or government bridges that crack within a year—chances are Esab’s consumables were part of it.
But here’s the funny part: the company isn’t just about welding rods and gas kits. It also makesplasma cutting systems, PPE, and robotic automation solutions.Basically, it wants to be the Apple of welding—premium, global, and with trademark royalties flowing to its parent in the UK. Yes, Esab India pays₹20 crore a year in trademark feesto the mothership. That’s like paying rent for using your own surname.
The stock, meanwhile, behaves like a diva. In the last year it’s down–19%, but over five years it’s up30% CAGR.It’s the kind of share that punishes short-term holders and rewards patient welders who don’t flinch at sparks.
3. Business Model (WTF Do They Even Do?)
Esab India’s business model can be summarized as: “If it burns, cuts, or fuses metal, we’re in it.”
- Consumables (Core):Welding electrodes, fluxes, and wires—the bread and butter at 73% of FY23 revenues.
- Equipment:Arc welders, plasma cutters, gas gear—21% of revenue.
- Services & Consulting:A 6% cherry on top—support, training, engineering.
- Distribution Muscle:~200 distributors across India, with 80% of sales through channel partners. The rest goes to large institutional clients who don’t like middlemen.
- Exports:Presence in 25+ countries—Brazil, USA, Nigeria, Sweden, etc. Welding may be local, but profits travel global.
- CAPEX Focus:₹31.9 Cr in FY23, pumping money into R&D centers, refurbishing plants,
- and upgrading IT. Translation: “Let’s weld the future, not just metal.”
Verdict: It’s a classic industrial FMCG model—repeat consumables (like toothpaste, but electrodes) + big-ticket equipment sales.
4. Financials Overview
Q1 FY26 Snapshot (latest)
| Metric | Latest Qtr (₹ Cr) | YoY % | QoQ % |
|---|---|---|---|
| Revenue | 339 | +18.7% | — |
| EBITDA | 80 | +25% | — |
| PAT | 54 | +26% | — |
| EPS (₹) | 34.8 | +26% | — |
Annualised EPS = 34.8 × 4 =₹139.2.At CMP ₹5,010 →Adjusted P/E ≈ 36×(not the headline 144, which is TTM distorted).
Commentary: Sales are growing steadily at high teens, profits are growing faster, and margins are comfortably above 23%. Investors, however, seem to confuse Esab with Tesla based on its headline P/E.
5. Valuation (Fair Value RANGE only)
- P/E Method:Annualised EPS ₹139.2 × 30–40× band →₹4,176 – ₹5,568.
- EV/EBITDA:EV ₹7,696 Cr / EBITDA ~₹530 Cr → 14.5×. Industry median ~18–25× →₹4,500 – ₹6,200.
- DCF (back-of-envelope):Assume 15% CAGR PAT, 10% discount rate →₹4,200 – ₹5,800.
👉Fair Value Range: ₹4,200 – ₹5,800.Disclaimer: For educational purposes only, not investment advice.
6. What’s Cooking – News, Triggers, Drama
- 420% Dividend in FY25.Yes, welding profits generously shared with shareholders. This is why DIIs love it.
- Parent Reorg:ESAB Corporation, USA, became ultimate parent in April 2022. That means more global tech, but also steady royalty outflows.
- Automation Push:Robotics and digital welding solutions
