Hold Welspun India; target of Rs 90: Sharekhan

Sharekhan's research report on Welspun India

Q2FY2023 was yet another weak quarter for Welspun India Limited (WIL), as revenue fell by 15% y-o-y to Rs. 21,153.5 crore, while EBIDTA margin plunged to 6.1% (vs. 16.5% in Q2FY2022), resulting in a 96% y-o-y decline in PAT to Rs. 8.3 crore. Demand is expected to remain muted owing to multiple headwinds such as higher consumer inflation, European energy crisis, and reduced share of discretionary spends. However, margins are likely to remain stable in the near term with softening raw-material and freight costs. Medium to long-term growth drivers include scaling up of D2C, domestic branded and e-commerce businesses, and consistent growth in the flooring business.

Outlook

We retain Hold with a revised PT of Rs. 90 (valuing at October 2024 earnings). The stock trades at 71x/16x its FY2023E/FY2024E earnings.