Buy Welspun India, target price Rs 150: Edelweiss

Edelweiss has buy call on Welspun India with a target price of Rs 150. The current market price of Welspun India Ltd. is Rs 130.

Time period given by analyst is one year when Welspun India Ltd. price can reach defined target.

Welspun India Ltd., incorporated in the year 1985, is a Mid Cap company (having a market cap of Rs 12579.16 Crore) operating in Textiles sector.


Financials
For the quarter ended 31-03-2021, the company reported a Consolidated Total Income of Rs 2173.56 Crore, up 6.04 % from last quarter Total Income of Rs 2049.71 Crore and up 30.59 % from last year same quarter Total Income of Rs 1664.46 Crore. Company reported net profit after tax of Rs 134.28 Crore in latest quarter.

Investment Rationale
WLSI’s guidance of 17-18% margin should see an upgrade as this guidance was based on RoDTEP rate of ~2.0%, which was ~6% of revenue under RoSCTL. Factoring the higher rate for FY22/23, the brokerage revises up EBITDA 7%/9% and comparable EBITDA margin (including other income) for FY22 stands at 21%. It also increases target multiple to 10x (9x earlier) H1FY23E EBITDA given the improved competitiveness and buoyancy in growth accelerating further for the sector. It maintains ‘BUY/SO’ with revised TP of INR150 (INR121 earlier).