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INVESTMENT INSIGHTS

Check Before You Invest : Esab India Ltd

BSE: 500133 NSE: ESABINDIA ISIN: INE284A01012
  |   Sector:  Capital Goods & Industrial Consumables   |   Industry:  Electrodes & Welding Equipment

Snapshot

Q.1 Which industry/sub-sector does Esab India Ltd belong to?
Esab India Ltd belongs to the Capital Goods & Industrial Consumables sector, operating specifically within the Electrodes & Welding Equipment segment.
Q.2 Is Esab India Ltd a good quality company?
Esab India Ltd is a good quality company, based on a consistently good multi-year financial track record.

This assessment is based on company’s performance on Revenue growth, ROCE, Equity and Assets, key margin ratios, cash conversion cycle, and debt to cash flow from operations and how it compares with its long term averages.

Q.3 Is Esab India Ltd undervalued or overvalued?
Esab India Ltd appears Overvalued, as its key valuation ratios are higher than their past averages.

Based on the industry it operates in, the relevant valuation ratios include one of the following, P/E, P/BV, P/Sales, EV/EBITDA or a combination of two or more.

Valuation Ratios Current 5-year
Historic Median
Price to Earnings 50.32 51.70
Price to Book 23.05 21.09
Price to Sales 7.16 5.93
EV to EBITDA 37.75 35.77
Q.4 Is Esab India Ltd a good buy now?
Esab India Ltd is a good buy now, based on strong price trend analysis suggesting prices may rise. However, you need to check its quality and valuation before making a decision

Performance Analysis

We have analysed the performance of the company on the following:

  • How has it performed on generating Profits?

    By checking its Revenue growth, Gross, Operating and Net Margins compared to its last 5-year median.

  • How efficiently has it utilized Capital?

    By checking its ROCE, ROA, ROE and its Cash Conversion Cycle.

  • How is it managing its Debt?

    By checking its Debt to Equity and Cash Flow from Operations.

A: What are the trends in revenue and profit margins?

Q.1 Revenue growth of Esab India Ltd?
Esab India Ltd revenue growth is 10.4% for FY-2025, which is below its 5-year CAGR of 14.77%, indicating slower growth.

Q.2 Gross Profit margin of Esab India Ltd?
Esab India Ltd Gross profit margin which is the profit after deduction of direct costs, is 17.8% for FY-2025, which is in line with its 5-year median of 17.5%, indicating stable margins.

Q.3 Operating Profit Margin of Esab India Ltd?
Esab India Ltd Operating Profit Margin which is the profit after deduction of all operating costs, is 17.63% for FY-2025, which is in line with its 5-year median of 17% indicating stable margins.

Q.4 Net Profit Margin of Esab India Ltd?
Esab India Ltd Net Profit Margin is 12.62% for FY-2025, is in line with its 5-year median of 12.29%, indicating stable margins.
Current Level 5-year
Historic Median
Gross Profit Margin (%) 17.8 17.5
Operating Profit Margin (%) 17.63 17
Net Profit Margin (%) 12.62 12.29

B: Does the business utilize capital efficiently?

Q.5 Return on Asset of Esab India Ltd?
Esab India Ltd Return on Asset is 29.62%, which is in line with its 5-year historical median of 29.62%, indicating stable asset utilization efficiency.

Q.6 Return on capital employed (ROCE) of Esab India Ltd?
Esab India Ltd Return on capital employed is 71.26% for FY-2025, which is in line with its 5-year historical median of 71.26%. The current ROCE is above its estimated weighted average cost of capital (WACC) of 13.5%, indicating value creation.

Q.7 Return on Equity (ROE) of Esab India Ltd?
Esab India Ltd Return on equity is 52.58% for FY-2025, which is in line with its 5-year historical median of 52.58%, indicating the business is making similar use of its shareholders capital.

Q.8 Cash conversion cycle of Esab India Ltd?
Esab India Ltd Cash conversion cycle is 28 days, in line with its 5-year historical median of 28 days, indicating stable working capital management. However, you need to compare this with its peers in the industry.
Current Level 5-year
Historic Median
Asset Turnover (x) 2.37 2.37
ROE (%) 52.58 52.58
ROCE (%) 71.26 71.26
Cash Conversion Cycle 28 days 28 days

C: How much debt does the business have and is it at a sustainable level?

Q.9 Debt to Equity ratio of Esab India Ltd?
Esab India Ltd Debt-to-Equity ratio is 0.00, which is lower the industry average of 0.09, indicating lower debt levels in the industry.

Q.10 Debt to cash flow from operations of Esab India Ltd?
Esab India Ltd Debt to cash flow from operations is 0, which is at a healthy level.

Ownership & governance

D: Promoter shareholding and pledge status of Esab India Ltd?

Q.1 Promoter shareholding and pledge status of Esab India Ltd?
Promoters hold 73.72% of the Esab India Ltd, with 0.00% of their stake pledged, indicating no pledge risk.

Peer comparison (industry-wise, mcap)

E: How does Esab India Ltd performance compare with that of its Peers?

Q.1 Revenue growth of Esab India Ltd vs industry peers?
Esab India Ltd revenue CAGR is 14.77%, compared to the industry median CAGR of 7.29%, indicating faster growth and gaining its market share.
Profit Metrics
Current Level 5-year
Industry Median
Revenue Growth (%) 10.4 7.3
Gross Profit Growth (%) 7.3 24
Operating Profit Growth (%) 7 21
Net Profit Growth (%) 7.4 19.8
Operating Efficiency
Current Level 5-year
Industry Median
Asset Turnover (x) 2.37 1.1
ROE (%) 52.58 11.33
ROCE (%) 71.26 14.01
Cash Conversion Cycle (days) 28.05 90

Valuation & price assessment

Q.1 Stock return of Esab India Ltd over the last decade?
Over the last 9 year(s), the stock has delivered a CAGR of 28.4% based on the current price.
9Y 5Y 3Y 1Y
Share Price
CAGR		 28.4% 30.8% 24.9% 49.3%
Q.2 Valuation ratios of Esab India Ltd vs historical?
The current P/E ratio of 50.32 is in line with than its historical median of 51.70, indicating that the stock is trading near its historical average valuation.
Q.3 How do the current valuation ratios compare with 5-year historical median and industry numbers?
Valuation Ratios Current 5-year
Historic Median		 5-year
Industry Median
Price to Earnings 50.32 51.70 19.09
Price to Book 23.05 21.09 1.95
Price to Sales 7.16 5.93 1.73
EV to EBITDA 37.75 35.77 10.27

Check more companies

1. Graphite India
2. HEG
3. Esab india
4. Ador Welding
5. Diffusion Engineers
6. GEE
7. De Nora India
8. D&H India
9. Panasonic Carbon
10. Royal Arc Electrodes

Check trending companies

1. GE Vernova T&D India Ltd.
2. Pidilite Industries Ltd.
3. Birlasoft Ltd.
4. Gabriel India Ltd.
5. Rail Vikas Nigam Ltd.
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