WELSPUNLIV - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 3.5
| Stock Code | WELSPUNLIV | Market Cap | 13,833 Cr. | Current Price | 145 ₹ | High / Low | 155 ₹ |
| Stock P/E | 33.8 | Book Value | 42.2 ₹ | Dividend Yield | 1.18 % | ROCE | 13.8 % |
| ROE | 13.2 % | Face Value | 1.00 ₹ | DMA 50 | 129 ₹ | DMA 200 | 132 ₹ |
| Chg in FII Hold | 0.06 % | Chg in DII Hold | 1.85 % | PAT Qtr | 148 Cr. | PAT Prev Qtr | 76.0 Cr. |
| RSI | 65.5 | MACD | 1.34 | Volume | 2,99,22,674 | Avg Vol 1Wk | 1,20,58,697 |
| Low price | 105 ₹ | High price | 155 ₹ | PEG Ratio | 3.91 | Debt to equity | 0.41 |
| 52w Index | 79.9 % | Qtr Profit Var | -15.9 % | EPS | 4.27 ₹ | Industry PE | 19.2 |
📊 Analysis: Welspun Living (WELSPUNLIV) trades at a P/E of 33.8, higher than the industry average of 19.2, indicating moderate overvaluation. ROE (13.2%) and ROCE (13.8%) are fair, reflecting average capital efficiency. EPS of ₹4.27 is modest, and quarterly PAT declined (-15.9%), raising concerns about earnings momentum despite strong revenue visibility. Dividend yield of 1.18% provides minor income support. PEG ratio of 3.91 suggests stretched growth-adjusted valuation. Technicals show RSI at 65.5 (slightly overbought) and MACD positive (1.34), pointing to short-term bullishness. Debt-to-equity at 0.41 is manageable but higher than ideal for consumer textile peers.
💰 Entry Price Zone: Ideal accumulation zone is between ₹125 – ₹135, closer to DMA200 (₹132) and below current levels, offering margin of safety.
⏳ Exit / Holding Strategy: If already holding, maintain with a medium-term horizon (3–5 years) given stable fundamentals and institutional support. Consider partial profit booking near ₹150 – ₹155 (recent high zone) if earnings do not accelerate. Long-term compounding requires stronger ROE/ROCE expansion and margin improvement.
Positive
- 🏦 Dividend yield of 1.18% provides income support.
- 📈 EPS of ₹4.27 supports earnings base.
- ✅ DII stake increased (+1.85%), showing strong domestic institutional confidence.
- 💡 Technicals (MACD positive) indicate short-term bullishness.
Limitation
- ⚠️ P/E (33.8) higher than industry average (19.2).
- 📉 PEG ratio (3.91) indicates poor growth-adjusted valuation.
- 🔻 PAT decline (-15.9%) raises concerns about earnings momentum.
- 🚫 Debt-to-equity at 0.41, higher than ideal for sector peers.
Company Negative News
- 📉 Quarterly PAT fell from ₹76 Cr to ₹148 Cr with variation showing -15.9% impact.
- 🚫 FII stake only marginally increased (+0.06%), showing limited foreign confidence.
Company Positive News
- ✅ EPS stability despite profit variation.
- 💡 Strong domestic institutional support with DII stake increase.
Industry
- 🏭 Textile & home furnishing industry PE ~19.2, lower than WELSPUNLIV’s valuation.
- 🌍 Sector growth driven by exports, premiumization, and rising domestic demand.
Conclusion
WELSPUNLIV is financially stable with fair ROE/ROCE and institutional support, making it a reasonable candidate for medium-term investment. However, valuations are stretched and earnings momentum has weakened. Ideal entry is near ₹125–₹135 for margin of safety. Existing holders should maintain positions but consider partial exit near ₹150–₹155 unless profitability improves. The stock suits cautious investors focusing on stability with valuation discipline.
Selva, would you like me to extend this into a peer benchmarking overlay (Welspun Living vs Trident, Indo Count, Himatsingka, etc.) so you can evaluate sector rotation and compounding potential more clearly?