Broker’s Call: Welspun Living (Buy)

Target: ₹181

CMP:L ₹153.80

India’s market share in the US home textile exports improved to 46/38 per cent in CY2023 for bedsheets/terry towels from 34/36 per cent in CY2022. With this, domestic players such as Welspun Living will benefit from improving global opportunities.

Management is confident about its medium-term prospects and targets its revenue to reach ₹15,000 crore in FY2027 with contribution from emerging businesses increasing to about 45 per cent by FY27 (versus around 34 per cent in Q3FY24).

However, rising cotton prices and recent unrest in the Red Sea are likely to put pressure on margins in the near term. Margins are likely to cross 15% in FY26 driven by scale up of flooring business and better realisation in core home textile business.

The management is optimistic about strong growth prospects in core textile business and consistent scale-up in its flooring business. Sustained market share gains in export markets will help home textile players to achieve strong performance in the coming years with a favourable input cost environment.

The new capacity additions will help the company to take benefit of the China +1 opportunity in the coming years. The flooring business is expected to scale up fast and will add incrementally to the company’s profitability in the medium term.

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