At a Glance
Welspun Living Ltd, the textile giant from the ₹2.7 lakh crore Welspun Group, was once the undisputed monarch of your hotel towels and bathrobes. But in the last five years, the company’s sales have barely grown, profits took a towel-dip, and promoter holding quietly slipped by 4%. With debt creeping up again and working capital cycles longer than a hotel check-out queue, investors are asking — is this luxury textile stock worth the thread?
🧻 1. What Business Does It Actually Do?
- Core Biz: Home textiles (bedsheets, towels, rugs, bathrobes) — contributes 92% of revenue
- Other Vertical: Flooring and technical textiles like wet wipes, spunlace, needle-punch fabric
- Brands: SPACES, Christy, Welhome, Disney Home, Martha Stewart, Wimbledon (yes, that Wimbledon)
- Export-Oriented: 65% of revenue comes from US & EU. If Walmart sneezes, Welspun catches a cold.
👑 Fun Fact: Every time you nap in a 5-star hotel in the US — odds are, you’re drooling on a Welspun bedsheet. Classy.
📉 2. 5-Year Financial Recap: From Soft Sheets to Hard Truths
| Metric | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| Revenue (₹ Cr) | 7,340 | 9,311 | 8,094 | 9,679 | 10,545 |
| EBITDA Margin (%) | 18% | 15% | 9% | 14% | 12% |
| Net Profit (₹ Cr) | 551 | 607 | 203 | 673 | 644 |
| EPS (₹) | 5.37 | 5.98 | 1.98 | 7.01 | 6.58 |
| Debt (₹ Cr) | 2,940 | 3,304 | 2,462 | 2,632 | 2,762 |
| ROCE (%) | 15% | 14% | 6% | 16% | 14% |
Verdict?
Margins dipped in FY23 due to freight and cotton inflation, recovered in FY24, but FY25’s rebound was lukewarm. EPS peaked in FY24 — but stock price didn’t. Classic disconnect.
🧾 3. Balance Sheet Check: Towel, Please!
- 🧽 Debt: ₹2,762 Cr as of FY25 — up from ₹2,462 Cr last year
- 🔄 Working Capital Days: 125 — cotton gets harvested faster than this
- 🧦 Inventory Days: 140
- 🧾 Receivable Days: 57 — Walmart likes to nap before paying
- 🔐 Interest Cost: ₹217 Cr in FY25, a 42% jump from FY23
🧠 Translation:
This is a capex-heavy, export-dependent biz with a big working capital cycle and rising finance costs. You can’t build this with asset-light dreams.
🧍 4. Promoters, Ownership & Red Flags
- 🧑💼 Promoter Holding:
- Jun 2022: 70.50%
- Mar 2025: 66.24%
🔻 Down 4.26%
- 🏦 FII Holding:
- Down from 7.07% to 5.35%
(That’s a luxury exit, not a boarding pass)
- Down from 7.07% to 5.35%
- 💬 Boardroom Talk:
- Announced acquisition of Drape Story (interior décor startup), then deferred it
- Probably realized even startup curtains won’t hide a ₹2,700 Cr debt bill
🧵 5. Valuation: Are You Paying for Towel Dreams?
- CMP: ₹130
- EPS (FY25): ₹6.58
- P/E (TTM): ~19.8x
- Book Value: ₹49.6
- P/B: 2.62x
- ROE: 13.7%
- 5Y Profit CAGR: 6% (barely enough to iron a shirt)
📉 Compared to Peers:
| Company | P/E | ROCE | 1Y Return |
|---|---|---|---|
| KPR Mill | 46.7 | 20% | +30% |
| Trident | 40.2 | 9.5% | +15% |
| Vardhman Textiles | 14.9 | 11.2% | -5% |
| Welspun Living | 19.8 | 14.4% | -10% |
Verdict:
Welspun trades at a premium to peers like Vardhman, despite flat growth and declining promoter trust. It’s not overpriced like KPR, but also not growing like KPR.
🎯 6. Fair Value Range — Let’s Not Thread Lightly
Let’s assume:
- Sustainable EPS range: ₹5.5 to ₹6.5
- Fair P/E: 13x (based on historical average, capex intensity, flat CAGR)
👉 Fair Value Range = ₹71 to ₹85
So unless you believe Martha Stewart herself is launching a ₹500-crore Welspun exclusive, it’s hard to justify ₹130.
🧺 7. TL;DR – Towel Down, Investor!
- Sales CAGR over 5 years? 9%.
- Profit CAGR? 6%.
- Stock Price CAGR? 31% — someone’s dreaming.
- Debt? Rising.
- Promoter holding? Falling.
- Valuation? Puffy.
🛑 If you’re looking for high-margin compounders, this isn’t it.
✅ If you’re building a towel empire or betting on US housing recovery — maybe. But don’t expect a 5-star ROI.
✍️ Written by Prashant | 📅 June 20, 2025
Tags: Welspun Living, Home Textiles, Martha Stewart, Welhome, Christy, Nifty500, Export Stocks, RPG Group, Textile Valuation, Fair Value Stocks, EduInvesting, Stock Analysis, Debt Heavy Stocks, Indian FMCG
