Welspun Living Gets Jefferies' 'Buy' Initiation On Strong US Presence, Potential Trade Deal Benefits

Jefferies has initiated coverage on Welspun Living Ltd., India's leading home textile exporter, with a 'buy' rating and a target price of Rs 185. The brokerage highlighted the firm's strong presence in the US market and its potential benefits from India's trade deals with the US and EU.

"Welspun Living is India's leading home textile exporter with the US as its largest market," Jefferies noted. The firm expects Welspun to deliver an 18% EPS CAGR over FY25-28, despite a muted FY26 due to near-term tariff uncertainty.

The company has a robust manufacturing capability, with one of the largest home textiles facilities globally. "US is WL's largest market, where it has a marquee clientele like Walmart and Costco with long-term partnerships and deep integration," Jefferies stated.

The company has diversified its portfolio by incubating future growth pillars, including its own brands such as Spaces Welspun and Christy, which account for 18% of revenue. "Emerging segments have clocked 20% CAGR (FY20-25), enabling WL to drive near-double digit topline growth," Jefferies added.

However, WL faces near-term headwinds due to uncertain tariffs in the US. "While India is relatively better placed with a 10% tariff versus 30% for China, uncertainty is likely to result in customers delaying purchase decisions," Jefferies explained.

Despite these challenges, Jefferies sees trade deals as a structural opportunity for WL. "India looks to accelerate free trade agreements with the US and the EU, after finalising one with the UK. These FTAs would bring parity for Indian exporters in UK/EU while providing a meaningful advantage in the US," the report noted.

Jefferies expects a subdued first half in fiscal 2026 for Welspun due to tariff uncertainty, but anticipates a recovery in the second half and beyond. "WL is a play on India's growing attractiveness for manufacturing and is a key beneficiary of potential FTAs with the US and the EU," Jefferies said.

Risks to this outlook include unfavourable tariffs, weak consumer demand in the US/EU, and higher cotton prices.