Hold Welspun India; target of Rs 115: Sharekhan

Sharekhan's research report on Welspun India

Welspun India’s (WIL’s) Q4FY2023 numbers were good, with revenues and margins growing sequentially. Revenues stood at Rs. 2,153.9 crore (up 15.2% q-o-q and fell by 3.3% y-o-y), while EBIDTA margins stood at 13% (improved by 253 bps q-o-q and 278 bps y-o-y). The management is cautiously optimistic on the near-term outlook and expects a gradual rise in order bookings amid inflationary pressures in the US & Europe. It targets 10-12% revenue growth and EBIDTA margins to improve to 15% in FY2024. Net debt fell by Rs. 695 crore y-o-y to Rs. 1,534.3 crore at FY2023-end. Management targets to further reduce net debt through improved cash flows in the coming years.

Outlook

The stock trades at 18x/13x its FY2024E/25E earnings. Any consistent improvement in the operating performance will be a key re-rating trigger for the stock. We maintain our Hold on stock with revised price target of Rs. 115.

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