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Welspun India reported an EBITDA of INR3.6bn in line with JMfe. EBITDA margins maintained sequentially at ~14.3% (up significantly YoY) on account of relatively subdued cotton, coal and container cost. Key takeaways from the concall are a) capacity utilisations reached ~85-90% levels in 2Q aided by black friday / festive sales related restocking b) The company has maintained its guidance of ~10-12% revenue growth in FY24 with EBITDA margins expected at 15% given a cautious 2H c) flooring growth to further pick up going forward as the company added new customers during the quarter d) high single digit margins guided for flooring segment during FY24 driven by ‘China+1’ shift e) net debt guidance remains unchanged at INR10bn for FY24 f) board had earlier approved change of name of the Company to “Welspun Living Limited” which has now been implemented. Capex for the first half stood at INR1.7bn while Net debt declined sequentially to INR15.7bn. The Board had also approved the Merger of Welspun Flooring Limited and other subsidiaries with Welspun India Limited. We introduce FY26 earnings and upward revise fair value (roll forward) estimate given reasonably favourable outlook on demand and easing cotton coal and container costs. We believe a) relatively subdued cotton price outlook b) GOI’s focus on developing the textile ecosystem c) likelihood of market size increase via FTAs with UK/EU over time is likely to lead to further re-rating. Maintain BUY.

*Revenues increase sharply qoq driven by festive orders: The Company reported a 15% QoQ increase in net sales to INR25bn. Consolidated EBITDA margins maintained QoQ at 14.3% vs 4Q mainly due to lower RM cost. Domestic Consumer business continued to be the most widely distributed Home Textile brand in the country with presence in 512+ towns and 13,265+ outlets. Consolidated PAT increased QoQ to INR2bn vs INR1.6bn in 1Q.

* Home textile margins maintained at high 14% levels: Home textile revenue increased sharply QoQ by 15% to INR23.5bn while flooring business increased 8% QoQ to INR2.4bn. Home textile margins expanded in 1H to 15.3%. Flooring business reported EBITDA of INR2.4bn vs EBITDA of INR2.2bn in 1Q. Bath Linen capacity utilisation increased to 93% vs 81% QoQ, Bed Linen capacity utilisation improved to 81% vs 57% QoQ while Rugs and carpets utilisation improved to 97% vs 90% QoQ.

*Capex towards new solar plant progressing on track: The Company is on track to establish a 30MW Solar Power plant at its Anjar facility with an investment of INR2bn. The company is also investing 0.6bn in a SPV for supply of 47 MW renewable energy. In 1H the Company has spent INR1.7bn towards capex. Net debt stood at INR15.7bn as at 2Q end, down 2.4bn QoQ . The Board had earlier approved the Merger of Welspun Flooring Limited and other subsidiaries with Welspun India Limited subject to NCTL approva

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CIN Number : L67120MH1986PLC038784