Esab India Ltd Research ReportStock Tales

Leading player in domestic welding market... Esab India (Esab) is a leading player in the Indian welding consumables and equipment industry with a market share of over 23% in the domestic structural welding consumable market and ~30% in domestic equipment market. It mainly operates in two segments viz. welding consumables (70%) and welding equipment (30%). Esab’s balance product portfolio, debt free status, strong global brand image and parentage (Colfax Corp) augur well in the long run. However, there could be short-term Covid-19 impact in FY21E. Welding consumable segment to sustain superior returns… Esab’s consumable segment (70% of revenue) has grown at a CAGR of 9.3% in FY15-20 while it is expected to grow at 8.7% CAGR in FY20-23E factoring in the Covid-19 impact and expected demand revival in high performance products like electrodes, wires and fluxes led by gradual economic recovery. Consumable EBIT margin has expended more than ~450 bps to ~17% levels in FY16-20 and is expected to sustain at similar levels in coming years. Consequently, consumable segment RoCE has been at 35-40% over the last few years and is expected to sustain, aided by mix of operating efficiencies, product mix, cost control, technological innovation and growing investments in infrastructure and manufacturing sectors.