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Axis Securities Report
Welspun Living Ltd. reported one of its strongest quarters beating our estimate on the revenue front. It reported revenue of 2,575 crore, up 20% YoY beating our estimate of 2,465 crore on account of growth in an emerging business along with growth in global branded business.
The Ebitda came in at 359 crore, up 29% YoY, in line with our estimate of 350 crore. This led to an overall profit after tax of 131 crore, up 1.2% YoY but missed our estimate of 196 crore by 33%.
The company has been steadily increasing its presence in emerging and branded businesses, a trend that is expected to contribute positively to margins in the future.
On the domestic front, Welspun continues to focus on steadily increasing its presence and continues its brand building. We believe Welspun's structural development across high-margin verticals and retail domestic focus will help not only in divesting business but also in expanding margins in the long term.
We thus maintain our outlook on Welpsun Living as its strong brand, large capacities and industry-leading position will help in rapid demand recovery. Moreover, potential UK and Euro FTA Agreements (combined have the same size as the U.S. Market) can open another untapped market for Welspun Living.
We marginally revise our estimates on several fronts, given our outlook on the sector and the management's guidance on the company as well as the way forward.
Consequently, we maintain our Buy rating on the stock and value the company at 15 times September-FY26E.
Our target price remains unchanged at Rs 210/share, implying an upside of 35% from the current market price.
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