| Main Products | Main Customer Industries |
|---|---|
| Welding Consumables, Reclamation Consumables, Arc Equipment, Industrial Gas Equipment, Environment Products, Cutting Systems | Shipbuilding, Petrochemical, Construction, Transport, Offshore and Energy Industries |
| Bullish Arguments | Bearish Arguments |
| Technology and Market leadership position in Welding Equipment industry | Low liquidity stock - higher impact cost in case of larger trades - entry & exit becomes difficult |
| Products command a premium due to higher value-add | Industrial slowdown & lack of capital investments could impact prospects |
| Parent, Esab Holdings UK, is one of the top two globally in welding technology -12% market share | Competition from unorganised sector, cheaper imports and international competitors setting up base in India |
| Strong Balance Sheet together with its technology leadership puts it in a better competitive position to face adverse business cycles | Volatility in raw material prices -raw materials constitute 60% of sales |
| Debt-free, Consistently RoA and RoE >40% , Free Cash flow/Sales >7% | |
| Barriers to Entry | Interesting Viewpoints |
| Brand - Esab is the strongest welding brand | Consumables demand has good correlation with Steel consumption. Industrial and Infrastructure activity pickup are key triggers. |
| Customer relationships - Long term relations built on trust and customised optimal solutions for each client | Wind Energy sector growth @ 25% plus - wind tower manufacture requires extensive use of welding equipment and recurring welding consumables expenditure. Each MW of wind power consumes 700 Kg of weld metal and 600 kg of weld flux |
| Disincentive to change supplier - welding consumables generally constitute 2% of fabrication costs but a weld failure can be catastrophic | After-market business segment comprises more than 30% of sales . Strong focus to build this segment rapidly |
| Technology - Esab has industry leading expertise & products -esp in critical applications |
4 Likes