Introduction

Let’s take a closer look at a stock called Ador Welding (AWL). It is a known name in the welding industry. One of the main competitor of AWL is Esab India. Read a comparison blog on them here.

Like many companies, AWL has going through a tough time. But what’s interesting for me are the shifts they are making.

These changes are set to significantly impact their operational and market performance for the long run.

The ONGC Experience

Not every project goes smoothly.

Ador Welding recently faced a considerable challenge with its ONGC Uran Flares Project.

This large and complex undertaking resulted in a significant write-off of INR 279 million in Q1FY26.

It directly impacted the company’s financial health. This led to negative EBITDA and Adjusted PAT for that quarter. It was a tough period, no doubt about it.

However, sometimes a setback can lead to a clearer vision.

The management has made a firm decision: they will no longer pursue such large-scale projects that are prone to complex issues. Instead, their focus is now squarely on medium-small size projects. These projects are much more aligned with AWL’s core capabilities.

Crucially, they also promise higher margins and are generally less tech-intensive, making them easier to execute.

This strategic adjustment means that the major operating loss from the ONGC project is expected to be largely accounted for in FY26.

So, what does this mean for the future?

We can anticipate improved profitability from FY27, as the company’s core business performance will no longer be dragged down by such problematic large projects.

Of course, these past challenges led to a downward revision in revenue, EBITDA, and net profit estimates for FY26E and FY27E.

For instance, the FY26E net profit estimate saw a 29% reduction. But even with these revisions, the company’s valuations still look attractive.

IDBI Capital, for one, maintains a “BUY” rating, indicating confidence in this new direction (see here).

Building a Stronger Core

Beyond changing its project strategy, Ador Welding is also sharpening its focus on its product portfolio.

The company is actively working on developing and launching more high-tech, higher-margin products.

There was also a positive sign in Q4FY25. The Products segment showed a healthy margin improvement of 200 basis points sequentially, reaching 14.3%. This paved the way for better profitability.

AWL has secured important approvals for specialized welding products in critical sectors such as nuclear, thermal, and defense.

Their emphasis is on advanced offerings like high-end welding consumables, flux-cored wires, and stainless steel products.

This focus isn’t just about innovation; it’s about driving growth.

Since pricing is expected to remain fairly stable, the growth in the coming quarters will largely be volume-driven as these new products gain traction.

Going Global

Ador Welding is expanding their international footprint.

The export market has been a bright spot for the company. In FY25, the international business grew by over 25%, with exports reaching around INR 1.5 billion.

They’ve made strategic forays into newer markets like Australia and the US, expecting these regions to deliver higher growth compared to more established markets like Saudi, Oman, or Dubai.

The management projects a 20-25% growth from the exports market in the next year, with the US market identified as a key driver for this expansion.

This push into high-growth international markets, particularly with their new high-tech products, is a clear sign of their global ambitions and a crucial factor for future success.

Domestic Resilience and Future Investments

While exports shine, the domestic market is not being ignored.

FY25 was a bit “tepid” for the company, largely due to weak steel prices and a demand squeeze. However, the management sees the weakness in infrastructure-led demand as transient. There’s an anticipation of a steady recovery in demand across key domestic sectors such as Nuclear, Thermal, Defense, and General Engineering.

Furthermore, rising steel prices are expected to become favorable in the coming months, which is a strong positive for AWL’s growth prospects.

Despite the tough market conditions, facing pressures from both customers and raw material costs, Ador Welding has managed to maintain its market share, which speaks about its resilience.

Looking ahead, the domestic capital expenditure (capex) momentum is projected to accelerate in FY26 and FY27 as geopolitical and tariff risks lessen. Ador Welding is positioning itself to capitalize on this.

They plan a capital expenditure of up to INR 400 million in the next year, consistent with previous years, showing continued investment in their core business.

Interestingly, they are not investing in the 3-D printing business, as they do not see it as a long-term sustainable investment.

To further strengthen their position, the company has also brought in key hires to its top management team, which is a positive sign for strategic direction and execution.

Conclusion

I think, Ador Welding’s is adapting and evolving.

A challenging mega-project has done them more harm than good.

Hence, they are strategically realigning their focus on higher-margin products and expanding globally.

Their ambitious vision is to double their revenue in the next four years by acquiring new customers and continuously introducing new products.