| Welspun Enterprises Limited | ||||||
| Rating outlook revised to 'Positive'; Ratings Reaffirmed | ||||||
| Rating Action | ||||||
| ||||||
| ||||||
| Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale Crisil Ratings has revised its outlook on the long-term bank facility of Welspun Enterprises Ltd (WEL) to ‘Positive’ from ‘Stable’ while reaffirming the rating at ‘Crisil AA-’. The rating on the short-term bank facilities and commercial paper has been reaffirmed at ‘Crisil A1+’.
The revision in outlook reflects expected improvement in the business risk profile, including the scale of operations driven by the increase in the order book position while sustaining the strong financial risk profile. The operating income is expected to see a healthy annual growth of around 10-15% over the medium term driven by expected increase in the order book to revenue ratio to around 6.5 times as on March 2026 from 4.4 times as of September 2025 (considering fiscal 2026 revenue estimates) as the company has recently been declared L1 Bidder for the Pune to Shirur built-operate-transfer (BOT) project. Earnings before interest, taxes, depreciation and amortisation (Ebitda) margin is expected to remain around 15% over the medium term (14% during fiscal 2025) on the back of asset light model of the company and high margin projects being executed by its subsidiary Welspun Michigan Engineers Ltd (WMEL; ‘Crisil A+/Positive/Crisil A1’). Overall, the annual net cash accrual, which is expected to remain healthy around Rs. 350- 400 Crore in fiscal 2026, is likely to further increase at a healthy pace over the medium term.
The financial risk profile is strong with low leverage and strong liquidity. Total outside liabilities to tangible networth (TOLTNW) ratio is expected at 0.6-0.7 time as on March 31, 2026, and adjusted interest coverage ratio is expected to remain strong above 7 times during the current fiscal. Though the company will have significant equity commitments over the medium term mainly for the BOT project, it has already raised Rs 250 crore through equity warrants with further Rs 750 crore available for conversion for any period within 18 months from December 2025. This, along with the expected monetisation of the existing hybrid annuity model (HAM) and BOT assets, should be adequate to fund the equity commitments over the medium term. Overall, the financial risk profile is expected to remain strong with TOL/ TNW ratio remaining below 0.7 time and adjusted interest coverage ratio remaining above 5 times over the medium term. In terms of liquidity, the annual cash accrual and largely unutilised bank limit of Rs 300 crore (as on November 30, 2025) should be adequate to fund the incremental working capital requirement. The cash and equivalents stood at Rs 986 crore and the management intends to keep around Rs 1,000 crore free cash and equivalents at all points of time. Timely monetization of the assets will remain a key monitorable.
The ratings also factor in the established track record of executing engineering, procurement and construction (EPC) contracts. These strengths are partially offset by high dependence on sub-contractors, working capital-intensive operations and intense competition in the construction industry. |
Analytical Approach Crisil Ratings has fully consolidated the financials of WMEL with WEL due to its strategic importance, operational and financial linkages, as well as the support philosophy in terms of providing ongoing and distress support to the entity. WEL increased its shareholding in WMEL to 60.09% in fiscal 2025 (from 50.1% in fiscal 2024). Crisil Ratings has moderately consolidated other special purpose vehicles (SPVs; including the new BOT project where the company has been declared L1) to the extent of equity requirement, expected cost overrun and support needed in the medium term. Also, Crisil Ratings has fully consolidated the debt of Dewas Waterproject Works Pvt Ltd and Welspun EDAC JV Pvt Ltd, which has received corporate guarantee (unconditional and irrevocable) from WEL.
Crisil Ratings has also treated the interest-bearing loans and advances as debt.
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers - Strengths Established track record of executing EPC contracts The Welspun group ventured into the infrastructure space in 2010 through Welspun Infratech Pvt Ltd by acquiring a majority stake in MSK Projects (India) Ltd (later renamed as Welspun Projects Ltd and now, Welspun Enterprises Ltd). Over the years, WEL has grown in scale and has undertaken public private partnership (PPP) projects related to roads, water and urban infrastructure. In the highway sector alone, the company has successfully completed six BOT (toll) road projects, covering length of over 500 km. Additionally, WEL was awarded India’s first HAM project, the Delhi-Meerut Expressway, where it received provisional commercial operations date (PCOD) 11 months before the scheduled completion date. WEL acquired 50.1% stake in WMEL in fiscal 2024 and purchased an additional 9.99% stake thus bringing its total shareholding to 60.09%. WMEL operates in the tunnelling and water infrastructure segment and its expertise will support WEL in expanding its operations in the segment.
Post divestment of five operational HAM projects and one operational BOT toll project, WEL has two under-construction HAM road assets, one EPC road project, two water connectivity projects and two wastewater treatment facility projects under the EPC segment. Most projects are sub-contracted to established, regional, mid-sized EPC companies with the Ghatkopar tunnelling project sub-contracted to WMEL. The longstanding presence of WEL has helped ensure that projects are completed in a timely manner though the execution of a few projects could be impacted by external factors. However, delays in execution as seen in two projects in recent fiscals could impact the revenue performance and remains a key sensitivity factor.
Healthy business risk profile, driven by strong and diversified orderbook providing revenue visibility Orderbook of Rs 13,741 crore (including O&M bid) as of September 2025 and L1 for the Pune to Shirur BOT project offers strong revenue visibility for the medium term. WEL is currently executing three large projects of contract value of around Rs 10,900 crore in wastewater segment (Dharavi STP and UP Jal Jewan Mission under execution) with Bhandup WTP, Ghatkopar to Dharavi tunnelling project and recently won Panjrapur WTP. The strong orderbook is expected to aid healthy revenue growth of around 15% over the medium term.
Additionally, the business risk profile has strengthened over the years. The water segment (including tunnelling) forms 68% of the current orders while the roads segment constitutes 8% and the balance 24% tunnelling segment.
Strong financial risk profile The financial risk profile is strong driven by low leverage and high cash surplus post asset monetisation of its operational assets to Actis Highway Infra Ltd. The networth and TOL/TNW ratio were Rs 2,740 crore and around 0.69 time, respectively, as on March 31, 2025, and are expected to increase to Rs 3,200-3,600 crore and 0.60-0.65 time, respectively, over the medium term.
WEL is also likely to receive around Rs 100 crore for divestment of the balance 51% stake in the Mukarba Chowk BOT asset in the near term. Annual net cash accrual of Rs 400-500 crore (excluding dividend) over the medium term should be adequate to meet the incremental working capital requirement and will support the financial metrics.
Though the company will have significant equity commitments over the medium term mainly for the BOT project, the company has already raised Rs 250 crore through equity warrants with further Rs 750 Crore available for conversion for any period within eighteen months from December 2025. This along with the expected monetization of the existing HAM and BOT assets, should be adequate to fund the equity commitments over the medium term. Nevertheless, significant increase in debt on account of large capital expenditure (capex) plans or acquisitions, high-cost overruns in existing projects, or substantial exposure to new ones, necessitating sizeable equity investment, are key rating sensitivity factors. |
Key Rating Drivers - Weaknesses High dependence on sub-contracting model, along with working capital-intensive operations WEL bids and outsources majority of the construction work to its subcontractors. The high dependency on subcontractors increases execution risk related to timely completion and quality of work, and limits the operating margin. However, WEL also benefits from its asset light model, low capex requirement and its ability to select regional sub-contractors for projects across India. Additionally, the company has a long and successful track record in completing large infrastructure projects and provides equipment to enable the subcontractors to execute projects in a timebound and cost-effective manner.
As an EPC player with robust orders, WEL had sizeable working capital requirement as reflected in gross current assets (GCAs) at 287 days as on March 31, 2025, and are expected to remain at 250-300 days over the medium term. The working capital cycle may remain stretched due to dependence on counterparties, which include state governments and the central government. As raising of bills and approvals take 2-3 months, receivables are likely to remain along similar lines. Receivables are likely to be 80-90 days and inventory (including contract assets) at 90-100 days over the medium term owing to high inventory requirement for WMEL. Any change in strategy to asset heavy structure or significant stretch in the working capital requirement will be monitorable.
Exposure to intense competition in the construction industry Increased focus of the central government on the infrastructure sector, especially roads and highways, should augur well for WEL. However, as most of the projects are tender based, the company is exposed to intense competition, which necessitates aggressive bidding and restricts the operating margin. In order to leverage from multiple options, WEL has also diversified its focus from road to water supply infrastructure and wastewater treatment segments. Also, given the cyclicality inherent in the construction industry, ability to maintain profitability through operating efficiency becomes critical. |
Liquidity Strong Cash and equivalents stood at Rs 986 crore as on September 30, 2025. Utilisation of the fund-based limit (Rs 300 crore) was minimal and the non-fund-based limit (Rs 2,300 crore) stood at 63% on average for the 12 months through November 2025. Existing cash and equivalents, annual net cash accrual of Rs 400-500 crore and unutilised bank limit should be adequate for meeting the equity commitments and incremental working capital requirement over the medium term in the absence of any debt obligation or any major capex plans. |
Outlook Positive Crisil Ratings believes the business risk profile of WEL shall improve with increase in scale of operations, driven by improvement in the orderbook position. The financial risk profile should also remain strong, aided by healthy capital structure and debt protection metrics. |
Rating sensitivity factors Upward factors:
Downward factors
|
About the Company WEL, formerly known as Welspun Projects Ltd, is a part of the Welspun group. Established in 1994, the company operates primarily in the infrastructure space with investments in oil and gas segments as well. Under infrastructure, WEL develops and operates PPP projects in various sectors such as roads, water and urban infrastructure. WEL is also engaged in exploration and production of oil and natural gas through Adani Welspun Enterprise Ltd, a joint venture with the Adani Group. It has four oil and gas blocks–three at the discovery/development stage and one block in the exploratory stage. WMEL is a prominent EPC company in India with specialisation in the niche business of tunnelling and pipeline rehabilitation in the water and wastewater segments. It is a pioneer and leader in the niche segment of trenchless technology in India with projects in Mumbai, Delhi, Kolkata, Gujarat and Odisha.
Over the six months ended September 30, 2025, WEL reported standalone revenue from operations of Rs 1,197 crore and profit after tax (PAT) of Rs 160 crore, compared with Rs 1,409 crore and Rs 154 crore, respectively, for the corresponding period of the previous fiscal. |
Key Financial Indicators (consolidated)*
*Crisil Ratings-adjusted numbers |
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
& - Fund Based facilities (Cash Credit) are one way interchangeable to Non Fund Based facilities |
Annexure – List of entities consolidated
|
| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Criteria Details
|