From Rs 66.10 to Rs 139.40: This Textile Stock Turned Into A Multibagger In 1 Year!

Company Performance

From Rs 66.10 to Rs 139.40: This Textile Stock Turned Into A Multibagger In 1 Year!

Led by an increase in consumer spending and demand for its products, the company has clocked a rally of 50.87% in the past six months. Indian-based manufacturer of textile products, Welspun India Limited has given investors multibagger returns of 110.89% over the last year. The share price stood at Rs 66.10 on December 04, 2020, and since then, the stock has more than doubled investor wealth. In Q2FY22, Welplun’s performance was boosted by a strong recovery in the international and domestic markets – which resulted in the topline growing by 26% YoY and 12.3% QoQ to Rs 2,487.63 crore. The company’s home textile business saw growth of 27% and its flooring business grew by 96%. Volumes of bath linen, bed linen, and rugs and carpets grew by 16%, 4%, and 29% YoY respectively. On the operational front, the company was hit with supply-side constraints and input cost inflation which brought down gross margins by 347 bps, while the operating profit margins contracted by 307 bps. As a result, PBIDT (Excluding Other Income) came in at Rs 409.98 crore, up just 6.25%, while the corresponding margin stood at 16.48%. PAT was reported at Rs 201.60 crore, up by 7.29% YoY. The management of the company is confident that they will be able to pass the rise in input cost to the customers through price hikes that will be undertaken in the coming quarters, thus restoring the margins to 20% by Q4FY22. Welspun India has continued to witness higher demand across geographies due to an increase in consumer spending in its core markets. Its US and European business has witnessed strong double-digit growth during the quarter and order levels have surpassed pre-Covid levels. The company continues to have a strong presence in the US, so much so that every fourth towel and every seventh sheet imported into the US is being manufactured by Welspun. The companies expansion plans at Vapi and Anjar which were announced in Q3FY21 are on track and 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 expansion initiatives will start accruing in phases from Q1FY23 onwards and it will have a revenue potential of Rs 1,207 crore from the second year of operation.