Welspun Living shares gain 5%; Jefferies retains 'Buy' call; check target price

Welspun Living Ltd shares surged on Thursday after Jefferies maintained a 'Buy' rating on the stock and retained a target price of Rs 260, implying a 14% potential upside from the brokerage's reference price of Rs 227.60.

The stock went up 7.65% to hit a 52 week high of Rs 245. It eventually closed 5.03% up at Rs 239.05 on BSE.

The foreign brokerage said easing US tariff uncertainty, sourcing diversification away from China and new growth opportunities from the UK and potential India-EU trade agreements could support the company's growth outlook.

Jefferies' report focused on the extension of the Rebate of State and Central Taxes and Levies (RoSCTL) scheme for textile companies. It said that the extension provides continued support to India's textile exporters until December 2026, while FTAs with the UK and EU could provide further opportunities for market-share gains.

Jefferies expects Welspun Living's revenue to grow at a 14% CAGR over FY26-FY29, while EBITDA is estimated to grow at a 38% CAGR. The brokerage expects revenue growth to recover to 13% in FY27, followed by 15% growth in FY28 and FY29. EBITDA growth is estimated at 64% in FY27, 27% in FY28 and 26% in FY29, with the EBITDA margin expected to improve from 8.4% in FY26 to 14.8% by FY29.

The brokerage also highlighted Welspun Living's diversification into flooring, advanced textiles, pillows and domestic brands. It expects sourcing shifts away from China, lower cotton and freight costs and improving business mix to support margins. Jefferies estimates the company's US business accounts for around 59% of revenue, while the UK and EU contribute around 18%.

For valuation, Jefferies values Welspun Living at 14 times one-year forward EV/EBITDA, which it said is at the higher end of the company's historical trading range, reflecting its improving growth profile, competitive positioning and diversified revenue mix. Key risks flagged by the brokerage include prolonged weakness in US demand, adverse tariff and trade policies, raw material and cotton price volatility, and execution risks in emerging businesses.