Buy WPIL; target of Rs 550: Emkay Global Financial

What happened

Emkay Global Financial maintained its BUY rating on WPIL but cut its target price to Rs550 from Rs650 after the company reported weaker-than-expected second-quarter performance. Revenue fell 17% year over year to Rs3.5bn and EBITDA, a measure of operating profit, fell 41% to Rs472mn.

Confirmed

Global impact / market context

Lower revenue and operating profit point to pressure on WPIL’s ability to convert sales into earnings. If delayed orders and slower project execution persist, revenue could remain weak; however, improved operating cash flow and a sizable order backlog provide potential support for future activity.

Analyst inference

Emkay reduced its average revenue and profit-after-tax estimates by 17% and 26% over FY26–29, while lowering its target price about 15%. The report links near-term weakness to deferred product orders, uneven international project revenue, and slower domestic order execution.

Confirmed

What to watch

1. Check whether deferred product orders return in the second half, as Emkay expects; their timing could determine whether the products division recovers from its reported decline. Analyst inference
2. Track project execution in domestic JJM orders and the timing of international revenue bookings, since both were cited as reasons for weaker project sales. Analyst inference
3. Compare later revenue, operating profit, and cash from operations with this quarter’s results to see whether lower earnings estimates or improved cash generation better describe performance. Analyst inference

Evidence

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