Buy Welspun Living; target of Rs 189: Sharekhan

Sharekhan's research report on Welspun Living

Welspun Living Limited’s (WLL’s) Q2FY2025 numbers were mixed, with revenue beating estimates and growing by 14.5% y-o-y to Rs. 2,873 crore, while EBITDA margin fell by 182 bps y-o-y to 12.4% and missed the mark. PAT stood flat y-o-y at Rs. 202 crore. Management is positive on demand outlook for the coming quarters and has maintained revenue guidance at 10-15% for FY2025 and for EBITDA margins (including other income) at 15-15.5%. WLL eyes revenue of Rs. 15,000 crore by FY2027. Board has approved phase-2 of capex of Rs. 709 crore to be incurred over FY2026-27 for home textile business to be funded by mix of internal accruals and debt. Net debt likely to reduce to Rs. 0-200 crore by FY2028 from Rs. 1,400-1,500 crore at FY2025-end.

Outlook

Stock trades at 20x/16x/14x its FY25E/FY26E/FY27E earnings, respectively. We maintain a Buy with a revised PT of Rs. 189.