Welspun Corp posts skyrocketing Q3 profit on strong demand

BENGALURU, Feb 6 (Reuters) - Indian steel pipes maker Welspun Corp reported an over twelve-fold jump in third-quarter profit on Tuesday, as strong demand for its pipes across sectors more than offset a surge in costs.

Steel consumption in India, the world's second-biggest crude steel producer, jumped during the period, reflecting buoyant demand in one of the world's fastest growing economies as pre-election spending by the government remained strong.

Welspun reported a strong surge in demand for its pipes - used for gas pipelines, irrigation and infrastructure - and forecast higher demand in the near-term on the back of sustained government spending.

The company reported a consolidated net profit of ₹292 crore ($35.2 million) for the quarter ended 31 December, compared to ₹23.2 crore last year.

Prices of steel products ticked up in October and November as Indians celebrated a delayed festive season, following lacklusture prices as cheap imports from countries like China surged.

The company - which makes line steel pipes in the United States and Saudi Arabia - reported a near-98% jump in revenue from operations at ₹4,750 crore.

However, its expenses also surged to ₹4,439 crore from ₹2,687 crore.

Welspun's results contrast rival APL Apollo Tubes, which reported a 2% drop in profit as the company de-stocked its products in anticipation of lower price corrections.

Shares of Welspun rose 4.7% after the results, but closed just 0.2% higher. For the reporting period, the shares rose 39%.