Buy Welspun Living; target of Rs 181: Sharekhan

Sharekhan's research report on Welspun Living

Welspun Living Limited’s (WLL’s) Q4FY2024 numbers were strong with revenues growing by ~20% y-o-y and EBIDTA margins rising ~100 bps y-o-y to 13.9% resulting in 29% y-o-y growth in the operating profit. WLL retained its conservative guidance of 10-12% revenue growth and EBIDTA margins to marginally improve in FY2025. Home textile business margins will remain at 15-15.5%, while margins of flooring business will improve with scale. FY2025 capex to be ~Rs. 860 crore (including maintenance capex of Rs. 340 crore); net debt will remain stable y-o-y. Investment in new capacities are likely to generate a RoCE of 20%+.

Outlook

We maintain a Buy with an unchanged PT of Rs. 181. Stock trades at 19.8x/16.3x its FY2025E/26E earnings.