Broking house, Edelweiss Research has recommended buy rating on Welspun India .
Edelweiss Research report on Welspun India:
"Welspun India's (Welspun) Q3FY07 results were in-line with expectations, delivering strong Y-o-Y growth in both revenue as well as profits. Growth drivers being both the bed-linen business which was commissioned during the current fiscal as well as the towels business. Net revenues increased by 65% Y-o-Y to INR 2.55 bn. PAT increased 115% Y-o-Y to INR 159 mn. EBITDA margin decreased by 720 bps Y-o-Y to 17.4%, driven largely by slower than expected capacity ramp-up in the bed-linen business. EBITDA grew 17% Y-o-Y to INR 444 mn."
"We expect Welspun to post strong growth in the next few quarters, as bed-linen business ramps up on higher capacity utilization and results in margin enhancement for the overall business. We believe that Welspun is well placed to strengthen its presence in top global retailers' shelves due to its strong brand focus, large scale and aided by the recent acquisition of Christy, UK's largest terry towel supplier. At INR 92, Welspun trades at P/E of 6.9x and 5.2x and EV/EBITDA of 6.3x and 5.0x our FY08 and FY09 estimates respectively. We maintain our 'BUY' recommendation."
