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This Multibagger Stock With 1-Year Return of 110.79% Is Axis Securities’ Pick of The Week
Welspun India's stock has offered stockholders multibagger returns in 2021, despite the enormous bull market. Today, this multibagger stock soared from Rs 71.85 to Rs 152.40 (4 Jan, 12:34 pm IST) in 1 year only. It has increased by 111.13 percent in the last year and by 116.25 percent during the last five years. The brokerage company Axis Securities has given a buy call on the shares of Welspun India Ltd in its latest pick of the week report. The brokerage has set a target price of Rs. 175 for the stock, with the expectation that it would rise even higher in 2022 to reach that price.
The brokerage’s take on Welspun India Ltd.
Axis Securities on 3rd Jan has said in its pick of the week report that "USA has officially passed a bill in its Senate house to ban cotton products from Xinjiang region which Huge Sectoral Tailwinds: The USA's ban on cotton products from the Xinjiang region (which accounts for 20% of world cotton production), has substantially increased demand for Indian Textile products. Moreover, the Indian Textile Industry has been a key beneficiary of the USA's China + 1 strategy which intends to de-risk its reliance on the Chinese supply chain since the Covid-19 outbreak. The company has also been benefiting from the rising trend of the Homebody Economy wherein the consumer spending pattern is shifting towards quality Home utility products. Tailwinds such as strong government policy support further back out thesis."
According to the brokerage "The company has extensive experience in distributing and marketing traditional home textile portfolios as well as built deep relationships with various distributors. Leveraging these advantages, WIL forayed into the Flooring solution market with a wide range of product offerings including Hard and Soft Flooring. The company has entered into a long-term strategic arrangement with one of the largest US-based distributors of hard-flooring and the product has received encouraging traction in other international markets as well. The company also plans to revolutionize the domestic interior and renovation market with this segment and is developing a distribution channel and product marketing for the same. The segment at its peak is expected to generate revenue of Rs 2,200-2,500 Cr with an asset turnover of 2-2.5x."
Financial Summary (Standalone)
| Y/E March | Sales (Rs Cr) | EBITDA (Rs Cr) | PAT (Rs Cr) | EPS (Rs) | Change (Y o Y%) | P/E (x) | RoE (%) | RoCE (%) |
|---|---|---|---|---|---|---|---|---|
| FY21 | 7,340 | 1,328 | 550 | 5.5 | NM | 27 | 16.20% | 15.70% |
| FY22E | 9,951 | 1.705 | 804 | 8 | 47 | 18.3 | 19.70% | 18.60% |
| FY23E | 11,466 | 2,180 | 1,139 | 11.4 | 42 | 12.9 | 22.80% | 23.70% |
| FY24E | 12,527 | 2,621 | 1,499 | 15 | 32 | 9.8 | 23.80% | 28.90% |
| Source: Axis Securities; CMP as on 31st Dec 2021 |
Buy Welspun India Suggests Axis Securities
In its research report, the brokerage has claimed that "The management continues to focus on product innovation and increasing the share of value-added products to improve the company's overall margin profile. The company is also focusing on increasing the share of E-commerce and private brands that have higher realizations. Given its long relationship with its consumer, WIL is able to pass on its cost with a time lag, reducing the impact of higher RM on the margins. We recommend BUY with a TP of Rs 175/share."
Disclaimer
The stock has been picked from the brokerage report of Axis Securities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.
