Buy Welspun India; target of Rs 84: Edelweiss

Edelweiss' research report on Welspun India

Welspun India’s (WLSI) Q4FY18 performance, as expected, was muted with revenues contracting 14% YoY impacted by currency, change in drawback rates and most importantly continued destocking by clients. To tackle an adverse year, the company had cut FY18 capex to INR3bn (earlier guidance was INR7bn), consequent to which net debt was stable at INR30bn.

Outlook

We are building in 8% volume growth for FY19 and expect it to moderate to 7% in FY20. We maintain our target multiple of 7.0x EV/EBITDA with our target price of INR84. Maintain ‘BUY’. At CMP, the stock trades at 10.7x FY20E EPS.