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Welspun LivingQ2 FY24

Welspun Living Q2 FY24 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹208P/E: 70.5Market Cap: ₹19.6K CrSector: Textiles & Apparels

Management growth scorecard

Revenue

Category 3

Margin

Category 3

Fundraise

N/A

Order

Yes

Capex

Yes

2 of 4 growth signals are positive.

Full analysis

Revenue guidance

Category 3
  • The company targets topline growth of 10-12% for FY’24 despite global economic volatility and geopolitical concerns.
  • Domestic consumer segment expects good growth in coming months as consumer sentiment improves, especially during the festive season.
  • Flooring business is growing steadily with increased order flows in US, UK, Middle East, and Africa; capacity utilization is rising.
  • Emerging businesses like domestic consumer, global brands, advanced textiles, and flooring grew 28% YoY in Q2.
  • Capacity utilization remains high (80-90%) for key products; debottlenecking and ancillary network optimization are being explored to support growth.
  • New and increased orders from marquee retailers indicate confidence and sustained demand.
  • The company is cautiously optimistic but committed to maintaining growth and profitability guidance.
  • Global brands and private label businesses are expanding in new geographies and channels, supporting future growth.

See what Welspun Living management said on margin guidance — free account, 30 seconds.

Fundraise plans

  • No explicit mention of any current or planned new fundraising through debt or equity in the Q2 FY'24 earnings call transcript.
  • Net debt as of Q2 FY’24 stands at ₹1,573 Crores, with an objective to reduce to below ₹1,000 Crores by FY’24 end.
  • Cost of debt is currently around 6.5%.
  • Management is focused on prudent capital allocation, especially regarding future capex decisions related to growth and capacity expansion.
  • Any future capex, possibly involving debottlenecking or new investments, will be assessed based on IRR and ROCE considerations.
  • No announcement regarding equity fundraising or fresh debt issuance was made during the call.

See what Welspun Living management said on order book — free account, 30 seconds.

Capex plans

Yes
  • Q2 FY'24 capex was ₹168 Crores, mainly for setting up a 30 MW solar power plant at Anjar facility.
  • Board approved investment of ₹56.4 Crores in a special purpose vehicle (SPV) to supply 47 MW renewable energy round-the-clock for Anjar operations, aiming for 80% renewable energy by 2026.
  • The SPV will set up a 150 MW solar plus wind plant; Welspun will hold 27% equity.
  • Exploring debottlenecking of existing capacity, especially in bath linen, to meet demand growth.
  • Considering incremental capex for flooring and home textile capacity expansion once utilization exceeds 95%, subject to prudence on IRR and ROCE.
  • Focus on optimizing ancillary network near factories for growth.
  • No specific timelines disclosed yet for new large capex; strategic decisions will depend on market conditions and ROCE metrics.

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Margin guidance

Category 3
  • Welspun Living Limited targets topline growth of 10-12% for FY’24, maintaining cautious optimism amidst global economic uncertainties.
  • EBITDA growth guidance is around 15% for FY’24, reflecting operational efficiencies and cost rationalization.
  • Home textile segment is expected to maintain gross margins of about 17-18%, with exports margins around 17-18% despite elevated cotton prices.
  • Emerging businesses (flooring, domestic consumer) currently offer lower margins but are expected to improve as they scale.
  • Flooring business capacity utilization is growing steadily (63% in Q2) with potential for debottlenecking and possible incremental capex if utilization exceeds 95%.
  • Profit after tax for Q2 was ₹197 Crores (up 22x YoY), H1 PAT ₹358 Crores (up 12x YoY), showing strong earnings growth momentum.
  • EPS for H1 FY24 stood at ₹3.70 vs ₹0.31 last year, reflecting strong profitability gains.

Order book

Yes
  • New and increased order flows from marquee retailers indicate strong trust and confidence in Welspun Living (Page 15).
  • The company has a robust order portfolio supporting their revenue growth commitment for FY’24 (Page 11).
  • Flooring business orders are not one-off; a consistent run rate of orders is expected due to China+1 strategy and diversified customer base (Page 6).
  • Multiple customers contribute to US flooring orders, with a granular mix rather than dependence on a few big players (Page 9).
  • For home textiles, 70-75% of business is replenishment-based, providing stability and visibility to the order book (Page 11).
  • UK FDA approval expected to boost order inflows within 6 months, expanding exports (Page 7).

How does Welspun Living rank vs peers in Textiles & Apparels?

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What Welspun Living's management said in earlier quarters

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