Buy Welspun India; target of Rs 102: Edelweiss

Edelweiss' research report on Welspun India

Welspun India’s (WLSI) Q4FY17 revenue, at INR 17.6bn, jumped a commendable 9% YoY and 17% QoQ (14% above estimate). On like‐to‐like basis (excluding Target) the revenue surge was even stronger. However, as expected, rise in cotton prices dented margin, which led to EBITDA margin contracting 130bps QoQ to 21.8%.

Outlook

Though WLSI has revised down FY18 margin guidance to 21‐22% (from 22‐23%) owing to cotton price pressure, the revenue spurt was commendable, driving 4% upwards revision in our FY19E EBITDA estimate. We maintain our 7.0x FY19E EV/EBITDA target multiple yielding TP of INR 102 (INR 99 earlier). Maintain ‘BUY’.