01 — At a Glance
The Welding Company That Prints Money Like a Joyride Ride
- 52-Week High / Low₹6,425 / ₹4,130
- 9M FY26 Revenue₹1,113 Cr
- 9M FY26 PAT₹163 Cr
- 9M FY26 EPS₹105.88
- Annualised EPS (9M×4÷3)₹137
- Book Value₹271
- Price to Book19.9x
- Dividend Yield (TTM)1.21%
- Debt / Equity0.01x
- Second Interim Dividend₹25/share
The Setup: ESAB India just crushed it through nine months of FY26. Nine-month PAT ₹163 crore (+29% vs 9M FY25). Nine-month revenue ₹1,113 crore (+10% vs prior year). Announced a second interim dividend of ₹25 per share on Feb 10, 2026 — a 250% payout ratio relative to Q3 earnings. Translation: management is so confident about cash generation that it’s literally handing dividends back faster than it earns profit. Meanwhile, the stock trades at 42x P/E — which is either genius or madness. Let’s find out which.
02 — Introduction
Welding Is Boring. ESAB’s Returns Are Not.
Imagine a business where 73% of shares are locked with the parent company (ESAB Group, USA — ultimate owner Colfax Corporation). Imagine it sells welding consumables and equipment that nobody debates the quality of because the whole category is determined by physics and engineering. Imagine it generates 70% ROCE — higher than most software companies — by literally just making metal stick together at high temperatures. Welcome to ESAB India.
Since its acquisition of Indian Oxygen’s welding business in 1991, ESAB has quietly built a welding fortress. Four manufacturing facilities. ~200 distributors. 71% of revenue from manufactured goods, 21% from traded goods. A 3-year ROE of 54.1%. Operating margins that sit stubbornly at 18–20% quarter after quarter. The company doesn’t pivot. It doesn’t disrupt. It just makes welding consumables and sells them to every infrastructure builder, railway workshop, and shipyard in India. Riveting stuff, literally.
FY26 has been particularly interesting. Revenue growth at 9.9% (5-year CAGR: 14.5%). Profit growth at 13.6% (5-year CAGR: 19.7%). The stock has returned 23.7% over one year and 13.2% over three years. And yet the valuation conversation is getting spicy because the P/E is knocking on 42x — which is either “this company deserves to trade like SaaS” or “the market has lost its mind.” Let’s dig into the numbers before you lose yours.
Quick Take: ESAB India trades at 42x P/E. The industry median is 23.1x. The stock has earned this premium through consistent 20%+ profit growth, 70% ROCE, and zero debt. Question is: can it keep growing at 13–15% forever? If yes, 42x is fair. If not, it’s expensive oxygen.
03 — Business Model: Making Metal Stick. Repeat.
The Unglamorous Engine of India’s Industrial Backbone
ESAB India’s business model is refreshingly simple: you weld things in India, you use consumables. Lots of them. Welding rods. Flux-cored wires. Submerged arc wires. Solid wires. Welding equipment (DC/AC machines, inverters, generators). Cutting equipment (plasma, oxy-fuel). Gas equipment. PPE. Automation and robotics for high-volume OEMs. Digital solutions for monitoring weld quality. The company sells to railways (Indian Railways, private operators), shipbuilders (Cochin Shipyard, defense contractors), infrastructure (NHAI, power plants), automotive OEMs, and heavy industries.
Revenue breakup (FY23): Manufactured goods 71.4%, Traded goods 20.6%, Services & consulting 6–8%. The manufactured portion is where the moat lives — high-spec consumables approved by OEMs, backed by technical support and brand trust built over 35 years of operations. Trade goods are lower-margin commodities. Services are high-margin R&D support, training, and automation integration sold to captive segments. The WACC is negative in some years because the business generates so much cash that debt is irrelevant.
Manufacturing happens at four facilities (Chennai, Kolkata, Nagpur, Chengalput). Distribution through ~200 dealers, ~80% of sales. Direct sales of ~20% to large institutional clients. International exports to 30+ countries (Australia, Bangladesh, Brazil, Czech Republic, China, Dubai, Sri Lanka, Nepal, Singapore, etc.). The company pays trademark royalties to ESAB Holdings Ltd (UK) — ₹20 crore in FY22. It’s the price of global brand credibility and access to parent company R&D.
Manufacturing71.4%FY23 Revenue
Traded Goods20.6%FY23 Revenue
Services~8%FY23 Revenue
Capital Allocation Note: FY23 CAPEX was ₹31.91 crore (vs ₹11.14 crore in FY22) — a 186% jump. Buildings for Global R&D, refurbishments, productivity improvements, capacity enhancements, IT upgrades. The company is investing in its future while still churning out 70% ROCE. That’s rare.
💬 Have you ever wondered who supplies the consumables for the bridge or railway line you travel on? It’s companies like ESAB, working behind the scenes. How much should that invisibility be worth in a stock price?
04 — Financials Overview
Q3 FY26: The Numbers Don’t Lie (But They Do Confuse)
