SIP Stock: Anil Singhvi explains why Welspun India stock is perfect for investors' portfolio

In a special segment of SIP Stock (Strong Investment Portfolio) show, Zee Business Managing Editor Anil Singhvi along with research analyst Ashish Chaturvedi explained why Welspun India is not only good in valuation but also a spectacular stock to invest in.

Explaining the fundamentals of Welspun India, Chaturvedi says that the company is one of the world’s leading manufacturers in the textiles sector. It earns 67 per cent of revenue from the United States and 17 per cent from Europe. It’s an exporter to 50 countries and associated with international retailers such as Walmart, Ikea, and Bed, Bath and Beyond companies.

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Welspun India is into the business of towels, bathrobes. Moreover, it has recently made an entry into flooring solutions. The company has spent at least Rs 30 crore on research and development in FY20 in hard flooring solutions, and expects to double the capacity by FY22 second quarter, says analyst.

The central government is constantly pushing to make India a textile hub, which will be an added advantage for the company going forward. Moreover, the foreign investors have huge confidence in the stock, they have increased their stake from 4.97 to 5.64 per cent. Even promoters have increased their stake from 68.89 to 70 per cent in the December-end quarter, explains Chaturvedi.

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Chaturvedi also mentions that Welspun India’s valuation and balance sheet are strong. It recently paid its Rs 374 crore term-loan upfront before time, and due to which, a rating agency CRISIL has raised its long-term rating from AA- to AA, the research analyst added. 

Other valuation parameters of the company are strong too. He points out that the market cap to sales is around 1.1x, price to book is around 2.3x and has 16x PE, Chaturvedi says while stating that it’s a company with 360 degree positive features to invest in.

The Market Guru concluded by saying, beautiful valuations, strong credit rating, and confidence of investors make Welspun India a perfect stock to invest in. He said, the textile industry in the next six months is set to grow exponentially and it would have a huge positive impact in the textile stocks space.