Buy Welspun Living; target of Rs 181: Sharekhan

Sharekhan's research report on Welspun Living

India’s market share in the US home textile exports improved to 46%/38% in CY2023 for bedsheets/terry towels from 34%/36% in CY2022. With this, domestic players such as Welspun Living Limited (WLL) will benefit from improving global opportunities. Management is confident about its medium-term prospects and targets its revenue to reach Rs. 15,000 crore in FY2027 (eyes domestic business to triple over FY2023-27), with contribution from emerging businesses increasing to ~45% by FY27 (versus ~34% in Q3FY24). However, rising cotton prices and recent unrest in the Red Sea are likely to put pressure on margins in the near term. Margins are likely to cross 15% in FY26 driven by scale up of flooring business and better realisation in core home textile business.

Outlook

We expect the company’s revenue/PAT to clock 13%/64% CAGR over FY2023-26E. Stock trades at 21x/17x its FY2025E/26E earnings. We maintain a Buy rating with an unchanged PT of Rs. 181.