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Accumulate Welspun India: Edelweiss Research
Edelweiss Research has recommended accumulate rating on Welspun India. The company has acquired 76% stake in Portugal’s bath rug major Sorema at an enterprise value of Rs 600 million. This acquisition will give the company access to the European market.
Edelweiss Research has recommended accumulate rating on Welspun India in its February 18, 2008 report. "Phase II of Welspun India's Rs 8.6 billion greenfield capacity expansion plan is expected to be commissioned by first quarter of FY09E. Continuing its acquisition it had acquired 85% stake in Christy UK in 2006 spree, Welspun acquired 76% stake in Portugal's bath rug major Sorema at an enterprise value of Rs 600 million. This acquisition will give the company access to the European market. Going forward, with the commissioning of capacities in FY09, Welspun's consolidated EPS is expected to increase at a CAGR of 40% over FY08-10E. At CMP of Rs 62, Welspun is trading at PE of 6.6x and 4.2x and EV/EBITDA of 7.9x and 6.7x on our FY08E and FY09E EPS consolidated , respectively. Moreover, the stock is trading below its book value. Also, it has a holding of 7.13 million shares in Welspun Gujarat, which at CMP accounts for Rs 44 per share of WLSI. We maintain our 'ACCUMULATE' recommendation," according to Edelweiss Research report.
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