Hold Welspun Living Ltd For Target Rs.209 By Sushil Finance
Follow us Now on Telegram ! Get daily 10 - 12 important updates on Business, Finance and Investment. Join our Telegram Channel
https://t.me/InvestmentGuruIndiacom
Download Telegram App before Joining the Channel
Welspun Living Ltd. recently announced its performance for the quarter ended June 30 2024. Following are the key highlights
Highlights from the Quarter (Q1 FY25) :
During Q1 FY25, the top line went up by 16% yoy to Rs.2,536.5 cr on account of strong 20% yoy growth in the exports despite issues in Red Sea. Growth during the quarter was driven by the volumes, while pricing was flat. Home textiles (91% of the sales) reported a growth of 17% yoy in revenue to Rs.2,387 cr, while flooring revenue reported revenue of Rs.228 cr, a growth of 1% yoy. Flooring sales were impacted due to the Red Sea crisis, however, the company expects a recovery in Q2FY25. On flooring, the management expects 20% CAGR over next 3- 4 years, with EBITDA margins to touch approx. 15-16% as against 9% as on Q1FY25.
EBITDA margin for the company was impacted marginally by 40 bps qoq to 13.5% in Q1 FY25.
The board of directors approved a capex investment totalling about Rs.850 cr to set up a new towel capacity of 6400 metric ton per annum at Anjar (present capacity – 90000 MT), to set up a pillow manufacturing facility with a capacity of 6.7 million in Ohio USA and investment for transmission lines for the new renewable energy facility being set up at Gujarat.
The company has guided a revenue growth of 10-12% in FY25 and EBITDA margin to be in the range of 15-15.5%. Management is confident that once emerging business like flooring, domestic and advanced textile gain traction, it can have a margin of 16-17% in the next couple of years.
OUTLOOK AND VALUATION
Raw material have peaked and are reflected in the margins in the current quarter. On the revenue front, we expect a gradual pickup due to long-term drivers like China+1 and possible FTAs with UK and EU and established brands. Going forward, we expect the company to deliver an EPS of Rs.11.6 in FY27, we arrive at a target price of Rs.209. We recommend a HOLD at current levels within the time frame of 18-24 months
Please refer disclaimer at https://www.sushilfinance.com/Disclamier/disclaimer
Member : BSE/ NSE/ MSEI. SEBI Registration No.-INZ000165135.
