Welspun is Asia’s largest and amongst world’s top four terry towel manufacturers with capacity of over 40,000 MTs with acquisition of brands like Christy, UK [Exclusive supplier to Wimbeldon Tennis championship] under its fold and global network of sales [in 32 countries] for home textiles . It also has over 40 million meters capacity for bed linen and small capacity of decorative beddings.
Company is preferred supplier to 14 out of the top 20 world’s largest retailers due to its cost, quality, innovation and designing capabilities.
Recently it has demerged its subsidiaries, (unlocking its value and focusing on core business), into Welspun Global brands [which is marketing arm] and Welspun investments Ltd [which has investments and treasury].
The financials of the company give a positive outlook with Q1 sales and earnings indicating, significant improvement in working results of current year. Cash earnings of company were very strong even last year. Another positive for the company is that it is located in the tax benefits zone.
Valuation wise, for Market Cap of Rs378 crore, one is getting company with sales of Rs1700 crore and cash profit of Rs225 crore [2010 expected].
It is discounting expected earnings by 3X and cash earnings are discounted by less than 2X. With global sustainable business, stock has potential to appreciate significantly.