Welspun Living · risk themes across the available quarters.
Bear-case history
Cotton prices and crude oil derivatives have increased sharply in recent months. Management acknowledged raw material inflation as a watch-out for the next couple of quarters, though they stated costs are being passed through to customers.
Unprecedented flooding at the Anjar facility caused partial disruption. Operations partially resumed within a week but Q2 will be impacted while Q3-Q4 restoration continues. The company is fully insured.
Analyst raised concerns about ROSL (RoSTL) expiring by September 2026 and its potential impact on export incentives. Management stated they will wait and hope for extension/positive outcome but acknowledged uncertainty.
While current tariff is at 10%, management declined to specify a level of confidence for tariff management. Competitors have stated they can manage up to 18-20% tariff. BTA talks with US are ongoing with uncertain outcomes.
Raw material costs rising sharply: cotton +10%, man-made fibers +20%, crude +40%. Management expects to share cost increases with customers via price negotiations (50/50 basis) but margin guidance may face pressure if realization lags.
Current 10% tariff applicable until July 2026; potential rise to 15-18% post-Section 122 expiry with Section 301 investigation on India still pending. Any tariff pass-through negotiations with customers remain ongoing.
Flooring segment saw steepest decline (25.1% YoY) due to West Asia logistics disruption and US tariff headwinds. Soft flooring and domestic flooring showing recovery but hard flooring rationalization ongoing; margin parity with core home textile business remains elusive.
Advanced textiles revenue declined 20% YoY to ₹452 crore primarily due to volume pressure and slower export offtake. Strategic shift to value-added niches (hygiene, specialty wipes, protective apparel) may take time to offset volume weakness.