Buy Welspun India: target of Rs 130: Sharekhan

Sharekhan's research report on Welspun India

Emergence of third COVID-19 wave and supply constraints dragged down bedsheet and terry towel exports by 36% y-o-y and 13% y-o-y, respectively, in January 2022. Amid global uncertainties, home textile exports expected to remain subdued in Q4FY2022. Welspun will bear the brunt of lower exports, clocking a ~10% y-o-y growth in Q4FY2022 versus 37% y-o-y growth achieved in 9MFY2022. EBITDA margin will decrease by 450-500 bps affected by higher input prices and transportation costs. Though near-term uncertainties will affect performance, long-term growth prospects of home the textile sector is intact with emergence of large export opportunities due to China + 1 factor, India’s trade agreements with various countries and market share gains.

Outlook

The stock has corrected by ~36% in the last three months and is currently trading at discounted valuations 12.3x and 9.0x its FY2023E/24E earnings. We maintain a Buy on the stock with revised price target of Rs. 130.

More Info

At 17:30 Welspun India was quoting at Rs 94.30, down Rs 1.50, or 1.57 percent.

It has touched an intraday high of Rs 98.35 and an intraday low of Rs 93.50.

It was trading with volumes of 220,624 shares, compared to its thirty day average of 339,564 shares, a decrease of -35.03 percent.

In the previous trading session, the share closed down 0.52 percent or Rs 0.50 at Rs 95.80.

The share touched its 52-week high Rs 170.75 and 52-week low Rs 75.55 on 12 October, 2021 and 15 April, 2021, respectively.

Currently, it is trading 44.77 percent below its 52-week high and 24.82 percent above its 52-week low.

Market capitalisation stands at Rs 9,317.39 crore.

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