Welspun Living (WELSPUNLIV)

FairStock Score: 53/100 — MIXED

Score breakdown: P/E: 0/3 · ROCE: 1/2 · Growth: 0/2 · Dividend: 0/1

Key Financials

Strengths

• Promoter holding of 66.24% aligns management interests with minority shareholders.
• Free cash flow of ₹746 Cr is positive despite weak reported profit.
• ROCE of 14.41% indicates acceptable operating-level capital efficiency.
• Five-year revenue CAGR of 7.52% shows some historical growth endurance.
• Piotroski F-Score of 6/9 suggests no severe fundamental red flags yet.

Concerns

• P/E of 51.56 with profit growth of -62.52% and latest quarterly net profit of just ₹3 Cr makes the valuation look extremely stretched.
• Graham Number of ₹51.11 versus price of ₹133.50 gives a margin of safety of -145.20% — no downside protection.
• EV/EBITDA of 207.99 and Altman Z-Score of 2.37 point to financial stress or a grey-zone balance sheet.
• ROE of 4.82% is weak, especially at a P/B of 2.66, and sales are declining at -5.36%.

AI Analysis

I have never been fond of buying a business when its earnings are falling and the market still prices it for perfection. Welspun Living sells at ₹133.50, a market cap of ₹12,021 crore, yet the latest quarter delivered ₹2,262 crore in sales and a net profit of just ₹3 crore. That is not earning power; that is a cyclical squeeze. The trailing P/E of 51.56 looks absurd when profit growth is –62.52%. Graham taught me to pay for a margin of safety. Here the Graham number is ₹51.11, and the stated margin of safety is –145.20%. The DCF value of ₹0.05 only reinforces how far the price is from conservative estimates. The balance sheet is not catastrophic: debt/equity 0.56, and free cash flow of ₹746 crore is a bright spot. But EV/EBITDA of 207.99 and Altman Z of 2.37 put it in the grey zone, not a fortress. Return on equity is 4.82%, while book value per share is ₹50.26. Paying 2.66 times book for a commodity textile business with declining sales is not my idea of value. The five-year revenue CAGR of 7.52% shows it has grown, but recent sales are down 5.36%, and the latest profit collapse proves the cycle has turned. Promoter holding of 66.24% is good and keeps management aligned, and a 1.36% dividend is a small consolation. Still, a quality business must earn well in ordinary times; this one earns poorly right now, and the price leaves no margin. The FairStock score of 27/100 labels it risky, and I agree. I would rather watch from the sidelines until earnings stabilise, debt stays controlled, and the price falls to a level where the arithmetic works. The numbers don't justify conviction.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer