Welspun Living Q3 - Structural Business Growth, Capex Plans To Bolster Revenue Visibility: Axis Securities

Axis Securities Report

Welspun Living Ltd.'s reported one of its strongest quarters on all fronts on the back of strong replenishment demand in the USA; however, missed our estimates as we expected higher pickup in the flooring segment.

Welspun reported revenue of 2411 crore up by 29% YoY missing our estimate of 2521 crore. The Ebitda came in at 339 crore up by 75% YoY lower than our estimate of 379 crore on account of flooring segment clocking 8.1% margins.

This led to an overall profit after tax of 179 crore up by 308% YoY but missed our estimate of 216 crore by 17%.

Valuation and recommendation:

We marginally revise our estimates to factor in better stable margins and strong operational performance.

Consequently, we have revised our target price to Rs 210/share from Rs 175/share earlier resulting ina 28% upside from current market price, valuing the company at 15 times September FY26E as we roll forward our estimates.

Key risks to our estimates and target price

Delay in free trade agreement with U.K. and Euro

Global recessionary and high inflation environment and the resultant slowdown in the U.S. economy.

Currency and key commodity fluctuations.

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