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Sector: Textiles & Apparels Date: May 3rd 2016
Recommendation - BUY @ 90-92 Report By: Surbhi Lohia – [email protected]
Page 2 Source: Company, www.dynamiclevels.com
Welspun India Ltd - Weaving Innovation to be the Global Market Leader
Company Overview and Stock price ……………………………….……3
Product Overview……………………………………………………….….…..4
Brands…………………………….…………….……………………….….…..…5
Welspun India Business Overview……....………….…..….….……...7
Textile Industry Outlook….……………………………………….….…….8
Company Financials……………………. ...…………….………….….…..11
Peer Comparison…………….…………………………………….……..…..15
Shareholding Pattern…………………………………..……………....….16
Company’s Future Outlook…………………………..……………....….18
Investment Rationale………………………………….………….......…..19
Report By : Vikash Kandoi – [email protected]; Surbhi Lohia – [email protected]
Page 3 Source: Company, www.dynamiclevels.com
Company’s Overview and Stock Price
Mumbai based company Welspun India run by Dipali Goenka is No. 1 home textiles company in the World. It exports more than 94% of its towels to more than 34 countries out of which 68% is to the US, 23 % to Europe and the balance to Middle East, Australia, Mauritius. It supplies to 12 out of the top 20 retail chains in the world like Wal-Mart, Target, Sam’s Club, Costco, Macy’s, Kohl’s, JC Penney, K-Mart, Sears, Tesco, ASDA, John Lewis Partnership, Carrefour, IKEA.
In FY 16 Welspun India has reported growth of 13% in Revenue, growth of 26% in EBITDA Margin and Return on capital Employed (ROCE) and the Free cash Flow(FCF) of the Company has been steadily increasing since last two years from negative to positive. In FY 16 the FCF was Rs 3.8 bn. The net debt of the Company has gone down by 500 Cr which it aims to be NIL by 2020.
EBITDA margin had gone up due to vertical integration in all the segments and commissioning of Spinning Units. Company’s 34% revenue is accounted by innovative products and 13% from branded products. Growth in domestic market was 47% in FY 16 contributed by both Retail and Hospitality segment. The Company is continuously expanding its production capacity. The towel capacity is expected to go up by 10,000 tonnes to 70,000 tonnes; sheet capacity to increase by 20 lakh metres to 92 lakh metres.
Chart Hypothesis: Above is the weekly price chart of Welspun India for last 1 yr, in which we can see that it made a new high of 111 recently and is consolidating at 97 levels since last 2 weeks.
COMPANY PROFILE OF WELSPUN INDIADIA
Date of Incorporation 17-Jan-85 Date of Listing 8-Feb-95
Management Name Designation
Balkrishan Goenka Chairman Apurba Kumar Dasgupta
Director
Arvind Kumar Singhal
Director
Dipali Goenka Executive Director Dipali Goenka Joint Managing
Director Rajesh Mandawewala
Managing Director
Padma Betai Nominee Director Registered Office Address
"Welspun City",Village Versamedi, Taluk Anjar,370110,Kutch,Gujarat,India
Website http://www.welspunindia.com
Welspun India Share Price Performance EXCHANGE SYMBOL WELSPUN
INDIA Current Price * (Rs.) 97.75 Face Value (Rs.) 1 52 Week High (Rs.) 111.40 (23-3-16) 52 Week Low (Rs.) 46.01 (06-5-15) Life Time high (Rs.) 111.40 (23-3-16) Life Time low (Rs.) 0.50 (10-5-99) Average Daily Movement 4.38 Average Volume [20 days] 1477914 1 Month Return (%) 0.91 P/E Ratio (x) 14.21 Book Value 21.25 Market Cap (Cr) 10002.04 (Cr) % of Promoter holding pledged
NIL
Page 4 Source: Company, www.dynamiclevels.com
Product Overview
Welspun India caters to following segments:
Retail Segment: Welspun collaborates with retail partners across the globe on every aspect of their inventory, marketing and distribution management. Welspun’s strong sales and merchandising teams based out of India, the USA and UK work closely with retailers to develop the most saleable variety of products. Welspun Global Brands is a vibrant company passionate about providing bed and bath textile innovations for almost 30 years. Welspun provides globally, to all major retailers, a complete suite of home textile products and services.
Welspun products can be found at established retailers, such as Wal-Mart, Target, Sam’s Club, Costco, Macy’s, Kohl’s, JC Penney, K-Mart, Sears, Tesco, ASDA, John Lewis Partnership, Carrefour, IKEA
Hospitality Solutions: Welspun Hospitality Solutions, an arm of Welspun’s USA subsidiary, provides bed and bath linen solutions to major hospitality chains and distributors globally. Their primary market is USA and is currently expanding into Europe and Asia. Welspun, with its superior quality bath, linen and top-of-bed products, caters to some of the best known names in the hospitality industry. Their products conform to the most stringent laundering standards and wash testing requirements globally. They provide to:
HOTEL CHAINS
From Luxury to Budget, hotels worldwide have been using our products in the bed, bath and top-of-bed categories for a quality customer experience. Our products help hotels save costs due to their durability and special qualities, such as quick drying linens. SPAS & RESORTS
Spas are relaxation havens, synonymous with luxury and comfort. Our products meet the very specific needs of the best spas and resorts in the world. CRUISES AND LINERS
Cruises pay close attention to details when it comes to looking after their guests. We help provide a high-class experience to their clients with our superior quality luxury products.
Page 5 Source: Company, www.dynamiclevels.com
Brands
Welspun offers some of the most formidable home textile brands
around the world. These brands all have their unique
characteristics and legacy, supported by Welspun quality and
innovation
Christy
Kingsley Home
Crowning touch
Spaces Home & Beyond
WELHOME
AMY BUTLER
SPUN
CHRISTY'S Christy’s is one of the world’s most venerable brands known for its rich history and core values that have pervaded through rapidly changing times. Innovation, luxury, integrity and trust are qualities that remain synonymous with Christy. Christy’s is one of UK’s largest and best known brands offering a wide range of luxury towels, bed linen and home accessories. Using superior yarns and high thread counts, all Christy products are crafted with meticulous attention to detail.
KINGSLEY HOME The Kingsley brand boasts a proud history which dates back more than six decades. Established in the 1950s, initially specializing in patterned towels, Kingsley quickly expanded its bath linen collections and network of customers. In 2010, Kingsley successfully launched its first bed linen collection which offered exceptional products at affordable prices. Kingsley products are available at selected department stores and reputable linens retailers across the UK and Europe. Kingsley products are exported throughout the rest of the world, where the British lifestyle approach succeeds as a result of its strong fashion influences.
Page 6 Source: Company, www.dynamiclevels.com
CROWNING TOUCH When it comes to ultimate luxury and indulgence, Welspun offers Crowning Touch the most luxurious range of bath and bed products that delivers on comfort and performance. It is the most celebrated line of products.
SPACES Welspun launched Spaces-Home & Beyond in India in 2004. Spaces is a brand that combines trendy, bold design with innovative superior quality products. Spaces is all about making a house feel like home while appealing to the aspirations of homeowners. Spaces is the culmination of Welspun’s global design strength and innovation excellence.
WELHOME Welhome is a chain of world class home & bath products at very competitive prices. Shoppers have a great experience as they discover beautiful products in the relaxed, fun environment offered by Welhome stores
AMY BUTLER Designer Amy Butler shares a common dream with Welspun to create beautiful vibrant designs out of eco-friendly, sustainable fibers. Amy Butler products are made from organically grown cotton using certified eco-friendly manufacturing processes. Amy presents a bright creative design spirit for the modern lifestyle. Her style is inspired by her love of gardens, nature, travel and everyday life. Her optimistic surface print designs and sewing fabrics are loved worldwide.
SPUN New handcrafted brand Spun is Welspun’s corporate social value initiative focusing on reviving the crafts of India and empowering women, artisans, farmers and weavers. SPUN gives a fresh look and new life to traditional Indian weaves and arts that have been disappearing. Collaborating with organizations of farmers and women, Welspun is introducing handcrafted one of a kind textiles: quilts, decorative pillows, and other bedding accessories Spun combines Welspun’s highly evolved design with traditional weaves and printing styles. Linked to the Gandhian principle of self-sufficiency, the yarn is spun on the chakra. Spun is all about rich folklore and history, songs, ballads and lyrics woven into beautiful products and brought to your doorstep.
Page 7 Source: Company, www.dynamiclevels.com
Welspun India Business Overview:
Welspun India Limited (WIL) is the Global Leader in Home
Textiles with global reach, delivering to more than 50
countries.
WIL supplies to 14 of the top 30 global retailers and has been
ranked 1st in the Top 15 Supplier Giants to the USA by Home
Textiles Today Magazine continuously for the last three years.
With world-class manufacturing facilities in Gujarat - India, the
company offers a wide range of home textile products in Bath,
Bedding and Flooring Solutions to its consumers from almost
every corner of the World.
Welspun has a strong presence in key markets like USA,
Canada, UK, and Europe and about 95% of its production is
exported to various countries across the World.
Welspun owns brands such as ‘Christy’, ‘Spaces’ and
‘Welhome’ which constitute around 11% of the sales.
Welspun has a strong emphasis on innovation which is
reflected in the number of patents and trademarks which it
holds and has applied for. More than 30% of the total revenues
of WIL come from the innovative products developed by the
company.
Page 8 Source: Company, www.dynamiclevels.com
Textile Industry Outlook
India’s textiles sector is one of the oldest and the largest contributors to India’s exports with approximately 11 % of total exports. The textile industry is labour intensive being one of the largest employer. The industry realised export earnings worth US$ 41.4 billion in 2014-15, a growth of 5.4 %.
Rising production of man-made fabric:
Production of man-made fibre has been increasing.
Production stood at 1.34 million tonnes in FY15.
During the period of FY07-15, production increased at a CAGR of 2.0 %.
During FY16 (April-October 2015), production stood at 0.77 million tonnes.
Cotton is the main segment in yarn and fabric:
Production of yarn grew to 673.60 Lakh Kgs in FY15 from 626.30 Lakh Kgs in FY11, a CAGR of 1.8 %.
Production of yarn between April to October’15 stood at 399.30 Lakh Kg.
Cotton yarn accounts for the largest share in total yarn production; in FY15, the segment’s share amounted to 61 percent.
Market Size:
The Indian textiles industry, currently estimated at around US$ 108 billion, is expected to reach US$ 223 billion by 2021.
The industry is the 2nd largest employer after agriculture, providing employment to over 45 million people directly and 60 million people indirectly.
The Indian Textile Industry contributes approximately 5% to India’s gross domestic product (GDP), and 14% to overall Index of Industrial Production (IIP).
The Indian textile industry has the potential to reach US$ 500 billion in size.
The growth implies domestic sales to rise to US$ 315 billion from currently US$ 68 billion. At the same time, exports are implied to increase to US$ 185 billion from approximately US$ 41 billion currently.
Page 9 Source: Company, www.dynamiclevels.com
Investment:
The textiles sector has witnessed a spurt in investment during
the last five years. The industry (including dyed and printed)
attracted Foreign Direct Investment (FDI) worth US$ 1.77
billion during April 2000 to September 2015.
Some of the major investments in the Indian textiles industry are as follows:
Reliance Industries Ltd plans to enter into a joint venture (JV) with China-based Shandong Ruyi Science and Technology Group Co.
Dupont has joined hands with RIL and Vipul Sarees for use of its renewable fibre product Sorona to make an ‘environment-friendly’ version of this ethnic ladies wear. Giving Indian sarees a ‘green’ touch.
Grasim Industries has invested Rs 100 crore to develop its first fabric brand, Liva', which it will distribute through 1,000 outlets as part of a plan to stay in sync with changing consumer behaviour.
Snapdeal has partnered with India Post to jointly work on bringing thousands of weavers and artisans from Varanasi through its website to empower local artisans, small and medium entrepreneurs to sustain their livelihood by providing a platform to popularise their indigenous products,” said Mr Kunal Bahl, CEO and Co-Founder, Snapdeal.
Welspun India Ltd (WIL), part of the Welspun Group has unveiled its new spinning facility at Anjar, Gujarat - the largest under one roof in India. The expansion project reflects the philosophy of the Government of Gujarat’s recent ‘Farm-Factory-Fabric-Fashion-Foreign’ Textile Policy, which is aimed at strengthening the entire textile value-chain.
American casual fashion retailer Aéropostale, Inc. has inked a licensing agreement with Arvind Lifestyle Brands Ltd to open standalone stores in the country. Aéropostale will open 30 stores and 25 shop-in-shop locations over the next three years.
Page 10 Source: Company, www.dynamiclevels.com
Government Initiatives:
The Indian government has come up with a number of export
promotion policies for the textiles sector. It has also allowed
100 % FDI in the Indian textiles sector under the automatic
route. Some of initiatives taken by the government to further
promote the industry are as under:
The GOI has started promotion of its ‘India Handloom’
initiative on social media like Facebook, Twitter and Instagram
to connect youth, in order to promote high quality handloom
products.
The GOI is expected to soon announce a new National Textiles
Policy. The new policy aims at creating 35 million new jobs by
way of increased investments by foreign companies.
Subsidies on machinery and infrastructure
The GOI has implemented several export promotion measures
such as Focus Market Scheme, Focus Product Scheme and
Market Linked Focus Product Scheme for increasing share of
India’s textile exports.
Financial assistance is provided for export promotion activities
on focus countries and focus product countries Under the
Market Access Initiative (MAI) Scheme,
Financial assistance is provided for a range of export
promotion activities implemented by Textiles Export
Promotion Councils Under the Market Development Assistance
(MDA) Scheme
The government has also proposed to extend 24/7 customs
clearance facility at 13 airports and 14 sea ports resulting in
faster clearance of import and export cargo.
A Memorandum of Understanding (MoU) has been signed
between India and Kyrgyzstan seeking to strengthen bilateral
cooperation in three fields -Textiles and Clothing, Silk and
Sericulture, Fashion-
Page 11 Source: Company, www.dynamiclevels.com
Company Financials
Profitability Highlights
Continuous increase in top line leading to increase in total
income from operations.
Operation profit has increased 30% YoY
Consistent increase in PAT, YoY it has increased by 19.2%
Increase in PAT has been in line with top line as earning per
share has gone up by 20% from Rs 16.07 to Rs 19.3
*Adjusted for stock split
Mar-16 Dec-15 Sep-15 Jun-15 Mar-15 Mar-16
Quarterly Quarterly Quarterly Quarterly Quarterly Annual
Net Sales 1,459.47 1,343.15 1,336.92 1,248.12 1,224.96 5,387.66
Other Operating Income 168.88 147.25 135.35 140.33 140.85 591.81
Total Income From Operations
1,628.35 1,490.40 1,472.27 1,388.45 1,365.81 5,979.47
Increase/Decrease in Stocks
35.94 -83.09 -2.32 76.88 -- 27.41
Consumption of Raw Materials
589.93 632.05 578.23 504.18 633.17 2,304.39
Purchase of Traded Goods
107.02 73.03 87.78 61.58 -- 329.41
Power And Fuel 44.25 30.52 25.92 32.83 32.11 133.52
Employees Cost 137.92 142.13 132.48 123.9 118.04 536.43
Depreciation 104.22 99.73 91.75 79.32 100.86 375.02
Other Expenses 290.4 295.19 275.93 229.26 237.93 1,090.78
Total Expenditure 1,309.68 1,189.56 1,189.77 1,107.95 1,122.11 4,796.96
Operating Profit 318.67 300.84 282.5 280.5 243.7 1,182.51
Other Income 26.86 17.21 19.72 27.72 28.95 91.51
P/L Before Int., Excpt. Items & Tax
345.53 318.05 302.22 308.22 272.64 1,274.02
Interest 66.29 59.24 51.45 59.26 56.91 236.24
P/L Before Exceptional Items & Tax
279.24 258.81 250.77 248.96 215.73 1,037.78
P/L Before Tax 279.24 258.81 250.77 248.96 215.73 1,037.78
Tax 82.48 81.35 74.66 83.95 50.77 322.44
PAT 196.76 177.46 176.11 165.01 164.97 715.34
Minority Interest -3.47 -3.38 -3.76 -1.86 -3.59 -12.47
Net Profit/(Loss) For the Period
193.29 174.08 172.35 163.15 161.38 702.87
Equity Share Capital 100.47 100.47 100.47 100.46 100.46 100.47
EPS (Rs.) *19.3 17.33 17.15 16.24 16.07 7.00
Name Ratio
Current Ratio (x) 1.7
Quick Ratio (x) 1.03
Dividend Yield (%) 0
Interest Coverage Ratio (x) 4.84
Debt Equity Ratio (x) 1.81
Return On Asset (%) 10.69
Return On Equity (%) 37.69
Page 12 Source: Company, www.dynamiclevels.com
Balance Sheet Highlights:
Net Worth doubled in 3 years
Long term and short term borrowing of Welspun India has gone down which is good for the Company
Balance Sheet (In Mn) Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16
Total Current Assets 9,201 15,546 16,532 23,348 27,557 25,617
+ Cash & Near Cash Items 263 1,476 1,718 2,323 2,090 1,243
+ Short Term Investments 881 1,197 394 641 1,405 533
+ Accounts & Notes Receivable 1,453 2,492 2,750 4,117 4,467 6,114
+ Inventories 4,597 7,293 8,205 10,094 11,006 11,046
+ Other Current Assets 2,008 3,087 3,465 6,172 8,589 6,680
Total Long-Term Assets 19,659 19,814 22,047 28,336 29,396 36,656
+ Long Term Investments 121 370 689 473 15 1,236
Gross Fixed Assets 22,380 24,616 25,781 39,374 44,544
Accumulated Depreciation 6,249 7,634 8,972 15,654 18,538
+ Net Fixed Assets 16,131 16,982 16,809 23,719 26,006 33,435
+ Other Long Term Assets 3,407 2,462 4,549 4,144 3,375 1,985
Total Current Liabilities 10,142 16,307 16,425 21,489 24,650 21,541
+ Accounts Payable 2,216 5,235 4,963 6,144 6,910 10,080
+ Short Term Borrowings 7,321 9,810 10,233 13,495 14,897 7,732
+ Other Short Term Liabilities 605 1,262 1,229 1,850 2,842 3,729
Total Long Term Liabilities 12,029 11,374 12,002 18,782 17,607 20,352
+ Long Term Borrowings 10,077 9,812 10,011 16,795 15,946 17,877
+ Other Long Term Borrowings 1,952 1,563 1,991 1,988 1,661 2,475
Total Liabilities 22,171 27,681 28,427 40,271 42,257 41,893
+ Long Preferred Equity 50 0 0 0 0 0
+ Minority Interest 0 250 250 316 378 503
+ Share Capital & APIC 4,102 4,208 4,227 4,239 4,242 1,005
+ Retained Earnings & Other Equity 2,538 3,220 5,675 6,858 10,076 18,872
Total Shareholders Equity 6,690 7,678 10,152 11,413 14,697 20,380
Total Liabilities & Equity 28,860 35,359 38,579 51,684 56,953 62,272
Book Value Per Share 7 8 10 11 14 20
Tangible Book Value Per Share 7 7 8 9 11 18
Page 13 Source: Company, www.dynamiclevels.com
Cash Flow Highlights:
Free Cash Flow Positive in 2015 and 2016
Cash flow Improved through tight working capital management and controlled Capital Expenditure.
Total Dividend paid Rs 1.3 i.e 26% of standalone PAT in FY16
Cash Flows (In Mn) Mar-11 Mar-12 Mar-13 Mar-14 Mar-15
Net Income 14 (134) 2,248 921 5,398
+ Depreciation & Amortization 1,203 1,378 1,449 6,863 3,329
+ Other Non-Cash Adjustments 85 868 350 (926) (101)
+ Changes in Non-Cash Capital 125 653 (1,928) (3,974) (2,399)
Cash From Operating Activities 1,428 2,765 2,119 2,884 6,228
+ Disposal of Fixed Assets 127 20 91 23 27
+ Capital Expenditures (2,091) (1,808) (2,847) (7,186) (5,795)
+ Increase in Investments (871) (301) 0 (2,459) (362)
+ Decrease in Investments 0 0 849 0 0
+ Other Investing Activities (529) 7 (26) 0 95
Cash From Investing Activities (3,364) (2,081) (1,932) (9,621) (6,034)
+ Dividends Paid (123) 0 (207) (238) (711)
+ Change in Short Term Borrowings 0 0 0 0 0
+ Increase in Long Term Borrowings 641 460 1,860 7,252 872
+ Decrease in Long Term Borrowings 0 (741) (1,196) 0 (1,305)
+ Increase in Capital Stocks 1,483 1 19 12 4
+ Decrease in Capital Stocks 0 (50) 0 (250) 0
+ Other Financing Activities 0 0 0 0 1,017
Cash From Financing Activities 2,000 (330) 477 6,776 (122)
Net Changes in Cash 64 354 664 39 71
Free Cash Flow (CFO-CAPEX) (663) 957 (728) (4,302) 433
Free Cash Flow To Firm (629) 1,861 596 (2,669) 2,173
Free Cash Flow To Equity 105 647 28 2,974 28
Free Cash Flow per Share (0.75) 0.96 (0.73) (4.29) 0.43
Page 14 Source: Company, www.dynamiclevels.com
Ratio Analysis
Valuation Ratios Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16
Price Earnings 268.15 18.25 3.02 10.96 6.62 14.14
EV to EBIT 15.80 8.33 5.31 12.17 6.26 10.47
EV to EBITDA 8.12 5.41 4.07 3.79 4.71 7.95
Price to Sales 0.20 0.14 0.19 0.23 0.67 1.84
Price to Book 0.57 0.54 0.69 0.91 2.50 5.00
Dividend Yield 0.00 0.00 0.06 0.03 0.03 0.01
Profitability Ratios
Gross Margin 0.00 0.00 0.00 0.00 0.00 0.00
EBITDA Margin 0.13 0.12 0.17 0.23 0.25 0.29
Operating Margin 0.07 0.08 0.13 0.07 0.19 0.22
Profit Margin 0.00 (0.00) 0.06 0.02 0.10 0.13
Return on Assets 0.00 (0.00) 0.06 0.02 0.10 0.12
Return on Equity 0.00 (0.02) 0.26 0.09 0.42 0.41
Leverage & Coverage Ratios
Current Ratio 0.91 0.95 1.01 1.09 1.12 1.19
Quick Ratio 0.26 0.32 0.30 0.33 0.32 0.37
Interest Coverage Ratio (EBIT/I) 1.24 1.50 2.70 1.54 4.21 5.01
Tot Debt/Capital 0.72 0.72 0.67 0.73 0.68 0.56
Tot Debt/Equity 2.60 2.56 1.99 2.65 2.10 1.26
Others
Asset Turnover 0.68 1.00 0.99 0.97 0.98 0.90
Accounts Receivable Turnover 11.42 16.33 13.92 12.74 12.35 10.18
Effective Tax Rate 0.97 0.47 0.25 0.19 0.28 0.31
Page 15 Source: Company, www.dynamiclevels.com
Peer Comparison
Company Name: WELSPUN INDIA HIMATSINGKA SEID SRF LTD
Latest Fiscal Year: 03/2016 03/2015 03/2015
52-Week High 111.40 251.00 1,498.85
52-Week High Date 3/23/2016 5/3/2016 8/5/2015
52-Week Low 46.01 74.05 899.00
52-Week Low Date 5/6/2015 6/9/2015 5/13/2015
Daily Volume 526,563 639,804 71,941
Current Price: 98.90 236.50 1,342.05
52-Week High % Change -11.2% -5.8% -10.5%
52-Week Low % Change 115.0% 219.4% 49.3%
Total Common Shares (M) 1,004.7 98.5 57.4
Market Capitalization 99,367.3 23,285.1 77,061.2
Total Debt 25,608.7 7,562.9 24,348.9
Minority Interest 502.9 - -
- Cash and Equivalents 1,776.5 261.9 1,933.0
Current Enterprise Value 123,702.4 29,951.0 91,436.8 Above table shows that all peer stocks are trading near its 52 week high. This implies that sector has strength and has potential to increase shareholders wealth.
FII Holding & P/E Ratio Comparison
INSTRUMENT % FII Holding
P/E Ratio (X)
Debt Equity Ratio (X)
HIMATSINGKA 7.4 15.51 0.83
SRF 16.09 20.54 0.89
WELSPUN INDIA
12.66 14.14 1.81
Above table showing Welspun has the lowest PE ratio compared to its Peers and good FII holding of 12.66%
Profitability Comparison
INSTRUMENT Net Profit in Cr
Equity in Cr
FV EPS
HIMATSINGKA 41.61 49.23 5.00 4.23
SRF 100.68 58.44 10.00 17.53
WELSPUN INDIA
174.08 100.47 1.00 17.33
In Dec Quarter Welspun has the highest profitability
and Equity capital among its peers
Price & Volume Comparison INSTRUMENT Price Avg. Volume Market
Cap (Rs. in Cr)
HIMATSINGKA 230.9 304354 2329
SRF 1352.05 139466 7706
WELSPUN INDIA
98.6 1482198 9937
Welspun has good market capitalization and average volume is above 14 lakh shares which suggest company has good market liquidity i.e. easily tradable in market.
Price Performance Comparison
INSTRUMENT 1M 3M 6M 1Y Post Budget
HIMATSINGKA 19.81 24.77 15.76 192.52 53.82
SRF 4.97 23.04 0.94 38.01 27.72
WELSPUN INDIA
2.97 12.04 38.64 99.17 18.61
Welspun has given movement of 18% after budget was announced on 29th Feb 2016.Welspun has been top performer in last 6 months.
Page 16 Source: Company, www.dynamiclevels.com
Shareholding Pattern
Persons holding securities more than 1% of total number of shares under category Public Shareholding.
Category Mar-16 Dec-15 Sep-15 Jun-15 Mar-15
KRISHIRAJ TRADING LIMITED Promoters 50.27 50.27 50.27 50.28 50.28
WELSPUN MERCANTILES LIMITED Promoters 11.19 11.19 11.19 11.19 11.2
WELSPUN WINTEX LIMITED Promoters 8.39 8.39 8.39 8.39 8.39
WELSPUN INFRA DEVELOPERS LIMITED Promoters 2.74 2.74 2.74 2.74 2.74
BODIES CORPORATE Non Promoters 3.05 4.06 NIL NIL NIL
GOLDMAN SACHS FUND LIMITED Non Promoters 2.04 2.04 2.04 2.33 2.05
RELIANCE CAPITALTRUSTEE COMPANY A/C Non Promoters 1.13 1.92 1.91 2.54 2.72
Promoters of Welspun India have kept their investment constant throughout the year
Shareholding Pattern Mar-16 Dec-15 Sep-15 Jun-15 Mar-15
Promoter and Promoter Group (%) 73.48 73.48 73.48 73.49 73.49
Indian 73.48 73.48 73.48 73.49 73.49
Foreign NIL NIL NIL NIL NIL
Institutions (%) 15.47 13.68 11.80 10.82 8.48
FII 12.66 5.02 7.46 6.06 3.55
DII 2.81 8.66 4.35 4.76 4.94
Non Institutions (%) 11.05 12.84 14.71 15.69 18.03
Bodies Corporate NIL NIL 4.70 5.64 6.92
Others 11.05 12.84 10.02 10.06 11.11
Custodians NIL NIL NIL NIL NIL
Total no. of shares (cr.) 100.47 10.05 10.05 10.05 10.05
Welspun India’s shareholding shows that FII investment has more than doubled from 5.02% to 12.66%
Page 17 Source: Company, www.dynamiclevels.com
92.42%
3.40%
3.00%
0.42%
0.35%
0.18%
0.15%0.08%
India
United States
Luxembourg
Unknown CountryTaiwan
Ireland
Canada
88.35%
10.34% 0.73% 0.36% 0.23% Corporation
Investment Advisor
Other
Individual
Geographic Ownership Distribution
India 92.42%
United States 3.40%
Luxembourg 3.00%
Unknown Country 0.42%
Taiwan 0.35%
Ireland 0.18%
Canada 0.15%
Others 0.08%
Institutional Ownership Distribution
Corporation 88.35%
Investment Advisor 10.34%
Other 0.73%
Individual 0.36%
9.23%
90.47%
0.29%
Ownership Statistics
Ownership (Institutional)
Ownership (Retail & Other)Ownership (Insider)
Ownership Statistics
Shares Outstanding (M) 1004.7
Float 27.1%
Ownership (Institutional) 9.23%
Ownership (Retail & Other)
90.47%
Ownership (Insider) 0.29%
Page 18 Source: Company, www.dynamiclevels.com
Company’s Future Outlook
Huge Opportunity for Indian Home Textiles:
1. Cotton Availability
2. Strong Domestic Market Potential
3. Competitive Costs
4. Supportive Govt. Policies.
5. Socio-economic factors.
India’s share in US market increased by 8% in 6 years for
Cotton Towels
India’s share in US market increased by 21% in 6 years for
Cotton Sheets.
Welspun India’s revenue is expected to reach $ 2 billion by
2020
Welspun India’s Innovative/ Branded product share is
expected to go up from 20% to 50% by 2020
Welspun India’s Domestic Market share of Revenue is
expected to be 20% of total revenue
Welspun India aims to have NIL debt by 2020
Page 19 Source: Company, www.dynamiclevels.com
Investment Rational
The future for the Indian textile industry looks promising, buoyed by both strong domestic consumption as well as export demand.
With consumerism and disposable income increasing, the retail sector has experienced a rapid growth in the past decade with the entry of several international players like Marks & Spencer, Guess and Next into the Indian market.
The organised apparel segment is expected to grow at a Compound Annual Growth Rate of more than 13 % over a 10-year period.
US New home-sales data is indicating a strengthening housing market while consumer confidence has been hitting multi-year highs.
While consumer confidence in Europe is edging higher, it is expected to get a further boost from falling oil prices and the ECB stimulus, which would improve real household spending power.
Indian textile exports to Europe are growing, despite a disadvantage in terms of import duty compared to other exporters like Pakistan, Bangladesh and Turkey.
The proposed India – EU Free Trade Agreement (FTA), if it goes through, will provide a strong push for textile exports from India to EU. The Indian economy is expected to grow faster in the coming years as economic reforms gather pace.
Other key markets, such as Japan, Korea, Australia, South Africa, also present huge potential for growth. India has signed an FTA (Free Trade Agreement) with Japan, Korea and the SAARC countries, which could be leveraged to increase Indian exports to these countries.
To summarise, the outlook for Indian cotton textiles, especially home textiles, continues to be positive.
We recommend BUY in Welspun India @ 90-92 with the Target of 110 as Welspun India
is the Market leader globally and the outlook for Indian cotton textiles, especially home
textiles, is positive.
Page 20 Source: Company, www.dynamiclevels.com
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