Multibagger Alert: This textile player has given returns of 113.59% in the past year!

Multibagger Alert: This textile player has given returns of 113.59% in the past year!

by 5paisa Research Team Last Updated: Dec 14, 2022 - 08:20 pm 44.2k Views
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On a YTD basis, the stock has given a return of 109.35%.

 Indian-based manufacturer of textile products, Welspun India Limited has given investors stellar returns of 113.59% over the last year. The share price stood at Rs 66.60 on December 03, 2020, and since then, the stock has more than doubled investor wealth.

Headquartered in Mumbai, Welspun India Limited engages in the manufacture of home textile products – which includes towels, bathrobes, bath rugs and carpets, mats, area rugs, carpet, bedsheets, utility bedding and fashion bedding, and generation of power.

Welspun India Limited’s Q2FY22 performance was boosted by a recovery in both domestic and international markets, with revenues growing by 26% YoY and 12.3% QoQ to Rs. 2,487.63 crore. This came on the back of a 27% growth in the home textile business and 96% growth in the flooring business which drove up revenues. Volumes of bath linen, bed linen, and rugs and carpets grew by 16%, 4%, and 29% YoY, respectively. The company was hit with supply-side constraints and input cost inflation which led to the gross margins contracting 347 bps and OPM falling by 307 bps. PBIDT (Ex OI) stood at Rs 409.98 crore, up 6.25% YoY, and the corresponding margin stood at 16.48%. Management is confident of passing the rise in input costs to customers through price hikes that will be undertaken in the coming quarters, thus restoring margins to the pre-COVID level of 20% by Q4FY22. Dragged by a weaker operational performance, PAT came in at Rs 201.60 crore, up 7.29% YoY but down 9.56% QoQ.

Led by an increase in consumer spending in its core markets, Welspun India continues to witness higher demand growth across geographies. US and European businesses have both registered strong double-digit growth during the quarter and order levels have surpassed pre-pandemic levels. The company have a strong presence in the US with every 4th towel and every 7th sheet imported into the US is being manufactured by Welspun.

Meanwhile, Welspuns expansion plans at Vapi and Anjar (for bedsheets and rugs) announced in Q3FY21 are expected to be completed by Q4FY22. Additional towel capacity at 16,600 MT is being installed at Anjar. According to the management, the benefits of these expansions will start accruing in phases from Q1 FY'23 onwards and it will have a revenue potential of Rs 1,207 crore from the second year of operation.

On Monday towards the market close, the stock of Welspun India Limited was trading at Rs 137.95, down by 3.02% or Rs 4.30 per share on BSE. The 52-week high of the scrip is recorded at Rs 170.75 and the 52-week low at Rs 65 on the BSE.

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