Buy Welspun Living; target of Rs 260: Motilal Oswal

Moneycontrol • 1 day ago

Original source

Key Investment Pillars

  • Double-digit growth: Welspun Living's revenue is expected to grow at a 16% CAGR over FY26-28, driven by volume recovery in the home textile segment and a steady growing flooring business.
  • Improving business mix: The company's gross margin expanded 113bp YoY to 45.1%, while EBITDA margin settled at 11.9% (+563bp YoY), led by an improving business mix.
  • Flooring business growth: The flooring business delivered 19% growth, improving this quarter, with management expecting low-double-digit margins to be sustainable.
  • Cost discipline: Management expects gross margin to remain at similar levels, hit by higher raw material prices, while guiding for a low-teen EBITDA margin.

Thesis Validation Checklist

To validate the thesis, investors should watch for: double-digit revenue growth, expansion of EBITDA margin, improvement in the business mix, and growth in the flooring business. Key risks include customer and geographical concentrations, and commodity price movements.