about company
• Welspun India Ltd (WIL), part of the $2.7 billion Welspun Group, is a global leader in Home Textiles, supplying to marquee global retail and hospitality brands. Our state-of-the art manufacturing facilities in India produce globally benchmarked products, driven by our differentiation strategy based on Branding, Innovation and Sustainability
• export about 94% of our home textile products, and over 65% of our production to the US, 25% to Europe and the rest to the Middle East, Australia and Japan.
global scenario-
Global textile and apparel trade stood at $839 billion which has grown at a CAGR of 4% since 2005. Apparel was the most traded T&A category across the globe with a share of 58% of the total T&A trade. Fabric was second to apparel and accounted for 19% of the total T&A trade. The global trade of T&A is expected to grow from the current $839 billion to $1,000 billion in 2025, while growing at a promising rate of over 3% when compounded annually.
Indian textile industry-
• Indian domestic textile and apparel market is estimated at $75 billion in FY21. The market fell 30% from $106 billion in FY20. The market is expected to recover and grow at 10% CAGR from FY20 to reach $190 billion by FY26.(the fall will expected to get recovered in upcoming 3 yrs)
• India is the second largest cotton producing country(China ranks first), growing 23% of the world’s cotton. It also has the largest area under cotton cultivation. As such, India’s textile industry is largely cotton-based. Cotton yarn/fabrics/made-ups and handloom products account for 40% of India’s total textiles export as of June 2021.Towels, bed sheets and other home linen are some of the most exported Indian cotton makeups. China, Bangladesh, and Vietnam are the top three importers of Indian cotton. Despite the difficulties posed by the pandemic, India’s cotton exports rose in volume by127% and in value by 106 %in April December 2020 compared to the same period in 2019. Indian cotton and cotton products have a price advantage over those produced in the US, Brazil, and Australia, which increases their export potential.
Home Textile -
The global home textile market was valued at $123.2 billion in 2019 and is expected to reach a value of $151.8 billion by 2025, registering a CAGR of 3.5% during the period (2019-2025). The US and Europe are the biggest consumers, receiving 60% of the home textiles imports, with countries like India, China, and Pakistan being the key suppliers. The industry is witnessing steady growth, driven by rising consumer spending on home renovation and fashionable household furnishing. Home textile products have surfaced as one of the most attractive and fashion sensitive segments in the overall textile market. The market has seen considerable growth during the past few years.
India’s Presence in Key Global Home Textile Markets-
• India commands a significant share in the global cotton home textile market.
• According to the Office of Textiles and Apparels (OTEXA) US, in CY20. India supplied about 42% of the cotton towels imported to the US, a share that has grown significantly from 30% in CY09. In the cotton sheets segment, the country supplied about 52% (CY20) of the total import to the US, increasing from 27% (CY09).
• The Indian home textile sector is reaping the benefits of market share gains in export markets such as the US and Europe with top competitors such China losing market share in the past two years. India’s share in bed linen export to the US has improved to 58% from ~50% in CY2019; while in terry towel exports, it has improved to 44% from 39% in CY2019. This along with sustained strong demand due to higher focus on home hygiene in the pandemic environment provided home textile companies strong growth levers. Top players such as WIL and HSL have expanded the capacities for bed linen/terry towel sensing to fulfil strong demand coming in from key markets because of higher spends on hygiene products and customers looking at India as an alternate supply base.
FY21 Key Business Highlights and Operational Data of Welspun India-
• The strong emergence of homebody economy structural shift in consumers spending has helped the overall growth for home products. n FY21, the Company delivered highest ever annual revenues with growth of 8% YoY. This has resulted in the highest ever bed linen, bath linen, and rugs and carpet sales volume in a year.
• Innovation is an integral part of Welspun’s DNA and the foundation on which our customer-centric solutions are built. Welspun has always focused on consumers’ needs and catered to them with innovations like Nanocore technology, industry-defining, multi-level traceability process Wel-Trak™ that tracks finished products back to the raw material, as well as HygroCotton technology. r Innovation product sales during the year was `19,287 million, registering a growth of 6% YoY and contributed 29% to the topliner.
• The pandemic has accelerated online spend significantly beyond prior years and more consumers have begun shopping online in greater numbers and frequency. Consumers spent $861.12 billion online with U.S. merchants in 2020, up an incredible 44.0% yoy, according to Digital Commerce 360 estimates.
• China’s share in the US market continues to be under pressure. As per OTEXA data, in the last three years we have seen India’s market share in Towel & Bed Sheets increase by 4% and reached to 42% and 53% respectively. Walmart has recently announced that it will triple its sourcing of goods from India to $10 billion each year by 2027. • The Company is taking rapid strides in the B2C business through licensed brands which will enable to deepen the connect with consumers across markets and aspirational categories.
Basic financial check-
• For FY21, Revenue from Operations was `73,402 million vs. `67,411 million in FY20, 8.9% up.
• Total Income stood at `74,080 million compared to `68,362 million last year, registering a YoY growth of 8.4%; EBITDA at `14,198 million as against `13,098 million in FY20 saw a YoY increase of 8.4%. PAT for the year was `5,397 million, which is around 1.06x that of previous year’s PAT of `5,074 million, and our Net Worth stood at `36,447 million. I am happy to report that Net Debt of core business has reduced by 46% in the last three years along with a continuous improvement in ROCE. FY21 also saw a significant 2.8x rise in Free Cash Flow (FCF) and continuous pay-out through dividend/ buyback.
Key points – • Company’s EPS is increasing, i.e. company is making money. On the top of that company has good amount of cash flow in hand.
• Company's surplus is increasing yoy and their capital expenditure is giving good results which is reflecting on their balance sheet.
• Most important point is company is reducing their boring and constantly paying the debt. Net debt as on March 31, 2021 stands at `23,327 million after reducing the cash and bank balance and liquid investment. At the end of FY20, the net debt was `29,618 million. The company’s current debt stands at Rs. 2,300 crore, which is expected to reduce to Rs. 2,200 crore by the end of FY2022. Management targets to achieve EBIDTA of around Rs. 1,600 crore in FY2022. The company will utilize Rs. 600 crore of EBIDTA for capital expenditure, Rs. 200 crore for buyback, and retain Rs. 180 crore-200 crore of cash on books. Further, the company plans to utilize Rs. 600 crore to pay-off debt. With double-digit growth in revenue and sustained improvement in profitability, WIL aims to become net cash positive by FY2025 which reflects the management is in good hands.
• Growth in revenue
• Increase in profitability
• Cost of material increased due to substantial increase in sales of products
• Company employee cost also increased, despite of covid no dent in employment
• Company has decreased their investments in subsidiary company. ( we can see some fall in other income )
Increase in EBITDA • Increase in PAT
• ROCE - 13.8 %( sufficient for small cap company)
• ROE – 16.3% (enough for 15% CAGR targets )
• No dent in operating and net profit margins
financials of companies are clean and company is growing and scaling up slowly and constantly. There is no massive spike in any aspects and in terms of margins, profitability or revenues. Company’s board of management is well experienced to scale up and handling the company operations. Even in pandemic situation there is no massive dent in revenues and profits which shows the capability and capacity to expand into mid-large caps and target bigger markets.
Key risks for company -
• After rebounding to an estimated 5.5% in 2021, global growth is expected to decelerate markedly in 2022 - to 4.1 %, reflecting continued COVID-19 flare-ups. About 95% of WIL’s revenue comes from export markets such as the US and Europe. Hence, any adverse currency movement or spike in inflation would act as a key risk to revenue growth.
• Due to inflation spike, commodity prices are going to go up. In that case, company’s expenditure on raw material cost will increase. Any significant increase in global cotton prices would act as a key risk to profitability.
• As many incentives given by government, during this consolidation period if any compotator company gets a slight opportunity or somewhere WIL gets lagged in process other will take lead and position themselves in this field.
TECHNICAL ANALYSIS-
for past 2 days buying in stock happened with volume.
stock is almost corrected 43% from its all time high.
due to global scenario, with this high volatility if stock falls again at level of 95 to 100 and giving bounce back, one can invest half capital in this
and keep other half if double bottom fails to accumulate more in buy on dips at level of 75 to 80.
this study is for education purpose only. invest your hard earned money after consulting with your financial advisor.
• Welspun India Ltd (WIL), part of the $2.7 billion Welspun Group, is a global leader in Home Textiles, supplying to marquee global retail and hospitality brands. Our state-of-the art manufacturing facilities in India produce globally benchmarked products, driven by our differentiation strategy based on Branding, Innovation and Sustainability
• export about 94% of our home textile products, and over 65% of our production to the US, 25% to Europe and the rest to the Middle East, Australia and Japan.
global scenario-
Global textile and apparel trade stood at $839 billion which has grown at a CAGR of 4% since 2005. Apparel was the most traded T&A category across the globe with a share of 58% of the total T&A trade. Fabric was second to apparel and accounted for 19% of the total T&A trade. The global trade of T&A is expected to grow from the current $839 billion to $1,000 billion in 2025, while growing at a promising rate of over 3% when compounded annually.
Indian textile industry-
• Indian domestic textile and apparel market is estimated at $75 billion in FY21. The market fell 30% from $106 billion in FY20. The market is expected to recover and grow at 10% CAGR from FY20 to reach $190 billion by FY26.(the fall will expected to get recovered in upcoming 3 yrs)
• India is the second largest cotton producing country(China ranks first), growing 23% of the world’s cotton. It also has the largest area under cotton cultivation. As such, India’s textile industry is largely cotton-based. Cotton yarn/fabrics/made-ups and handloom products account for 40% of India’s total textiles export as of June 2021.Towels, bed sheets and other home linen are some of the most exported Indian cotton makeups. China, Bangladesh, and Vietnam are the top three importers of Indian cotton. Despite the difficulties posed by the pandemic, India’s cotton exports rose in volume by127% and in value by 106 %in April December 2020 compared to the same period in 2019. Indian cotton and cotton products have a price advantage over those produced in the US, Brazil, and Australia, which increases their export potential.
Home Textile -
The global home textile market was valued at $123.2 billion in 2019 and is expected to reach a value of $151.8 billion by 2025, registering a CAGR of 3.5% during the period (2019-2025). The US and Europe are the biggest consumers, receiving 60% of the home textiles imports, with countries like India, China, and Pakistan being the key suppliers. The industry is witnessing steady growth, driven by rising consumer spending on home renovation and fashionable household furnishing. Home textile products have surfaced as one of the most attractive and fashion sensitive segments in the overall textile market. The market has seen considerable growth during the past few years.
India’s Presence in Key Global Home Textile Markets-
• India commands a significant share in the global cotton home textile market.
• According to the Office of Textiles and Apparels (OTEXA) US, in CY20. India supplied about 42% of the cotton towels imported to the US, a share that has grown significantly from 30% in CY09. In the cotton sheets segment, the country supplied about 52% (CY20) of the total import to the US, increasing from 27% (CY09).
• The Indian home textile sector is reaping the benefits of market share gains in export markets such as the US and Europe with top competitors such China losing market share in the past two years. India’s share in bed linen export to the US has improved to 58% from ~50% in CY2019; while in terry towel exports, it has improved to 44% from 39% in CY2019. This along with sustained strong demand due to higher focus on home hygiene in the pandemic environment provided home textile companies strong growth levers. Top players such as WIL and HSL have expanded the capacities for bed linen/terry towel sensing to fulfil strong demand coming in from key markets because of higher spends on hygiene products and customers looking at India as an alternate supply base.
FY21 Key Business Highlights and Operational Data of Welspun India-
• The strong emergence of homebody economy structural shift in consumers spending has helped the overall growth for home products. n FY21, the Company delivered highest ever annual revenues with growth of 8% YoY. This has resulted in the highest ever bed linen, bath linen, and rugs and carpet sales volume in a year.
• Innovation is an integral part of Welspun’s DNA and the foundation on which our customer-centric solutions are built. Welspun has always focused on consumers’ needs and catered to them with innovations like Nanocore technology, industry-defining, multi-level traceability process Wel-Trak™ that tracks finished products back to the raw material, as well as HygroCotton technology. r Innovation product sales during the year was `19,287 million, registering a growth of 6% YoY and contributed 29% to the topliner.
• The pandemic has accelerated online spend significantly beyond prior years and more consumers have begun shopping online in greater numbers and frequency. Consumers spent $861.12 billion online with U.S. merchants in 2020, up an incredible 44.0% yoy, according to Digital Commerce 360 estimates.
• China’s share in the US market continues to be under pressure. As per OTEXA data, in the last three years we have seen India’s market share in Towel & Bed Sheets increase by 4% and reached to 42% and 53% respectively. Walmart has recently announced that it will triple its sourcing of goods from India to $10 billion each year by 2027. • The Company is taking rapid strides in the B2C business through licensed brands which will enable to deepen the connect with consumers across markets and aspirational categories.
Basic financial check-
• For FY21, Revenue from Operations was `73,402 million vs. `67,411 million in FY20, 8.9% up.
• Total Income stood at `74,080 million compared to `68,362 million last year, registering a YoY growth of 8.4%; EBITDA at `14,198 million as against `13,098 million in FY20 saw a YoY increase of 8.4%. PAT for the year was `5,397 million, which is around 1.06x that of previous year’s PAT of `5,074 million, and our Net Worth stood at `36,447 million. I am happy to report that Net Debt of core business has reduced by 46% in the last three years along with a continuous improvement in ROCE. FY21 also saw a significant 2.8x rise in Free Cash Flow (FCF) and continuous pay-out through dividend/ buyback.
Key points – • Company’s EPS is increasing, i.e. company is making money. On the top of that company has good amount of cash flow in hand.
• Company's surplus is increasing yoy and their capital expenditure is giving good results which is reflecting on their balance sheet.
• Most important point is company is reducing their boring and constantly paying the debt. Net debt as on March 31, 2021 stands at `23,327 million after reducing the cash and bank balance and liquid investment. At the end of FY20, the net debt was `29,618 million. The company’s current debt stands at Rs. 2,300 crore, which is expected to reduce to Rs. 2,200 crore by the end of FY2022. Management targets to achieve EBIDTA of around Rs. 1,600 crore in FY2022. The company will utilize Rs. 600 crore of EBIDTA for capital expenditure, Rs. 200 crore for buyback, and retain Rs. 180 crore-200 crore of cash on books. Further, the company plans to utilize Rs. 600 crore to pay-off debt. With double-digit growth in revenue and sustained improvement in profitability, WIL aims to become net cash positive by FY2025 which reflects the management is in good hands.
• Growth in revenue
• Increase in profitability
• Cost of material increased due to substantial increase in sales of products
• Company employee cost also increased, despite of covid no dent in employment
• Company has decreased their investments in subsidiary company. ( we can see some fall in other income )
Increase in EBITDA • Increase in PAT
• ROCE - 13.8 %( sufficient for small cap company)
• ROE – 16.3% (enough for 15% CAGR targets )
• No dent in operating and net profit margins
financials of companies are clean and company is growing and scaling up slowly and constantly. There is no massive spike in any aspects and in terms of margins, profitability or revenues. Company’s board of management is well experienced to scale up and handling the company operations. Even in pandemic situation there is no massive dent in revenues and profits which shows the capability and capacity to expand into mid-large caps and target bigger markets.
Key risks for company -
• After rebounding to an estimated 5.5% in 2021, global growth is expected to decelerate markedly in 2022 - to 4.1 %, reflecting continued COVID-19 flare-ups. About 95% of WIL’s revenue comes from export markets such as the US and Europe. Hence, any adverse currency movement or spike in inflation would act as a key risk to revenue growth.
• Due to inflation spike, commodity prices are going to go up. In that case, company’s expenditure on raw material cost will increase. Any significant increase in global cotton prices would act as a key risk to profitability.
• As many incentives given by government, during this consolidation period if any compotator company gets a slight opportunity or somewhere WIL gets lagged in process other will take lead and position themselves in this field.
TECHNICAL ANALYSIS-
for past 2 days buying in stock happened with volume.
stock is almost corrected 43% from its all time high.
due to global scenario, with this high volatility if stock falls again at level of 95 to 100 and giving bounce back, one can invest half capital in this
and keep other half if double bottom fails to accumulate more in buy on dips at level of 75 to 80.
this study is for education purpose only. invest your hard earned money after consulting with your financial advisor.