This Welspun Group stock gets a thumbs up from Jeffries with a 42% upside potential

Global brokerage firm Jefferies has initiated coverage on Welspun Living Ltd. with a ‘Buy’ rating and a price target of ₹185 per share.

The foreign brokerage wrote in its note that Welspun Living is India’s leading home textile exporter, with the US as its largest market, accounting for over 60% of the company’s revenue. The company boasts a strong client base, including retail giants like Walmart and Costco, with whom it maintains long-term partnerships and deep supply chain integration.

Welspun is also expanding its footprint in other regions, including the UK, European Union, Gulf Cooperation Council (GCC) countries, Japan, Australia, and New Zealand — markets that have shown faster growth in recent periods.

Jefferies believes Welspun could be a major beneficiary of India’s potential free trade agreements (FTAs) with the US and the European Union, similar to the FTA finalised with the UK.

Tariffs: A near-term headwind

The brokerage flagged near-term risks due to tariff uncertainty in the US. While India currently faces a lower tariff rate of 10% (compared to 30% for China), the lack of clarity may lead customers to delay orders. Retailers might also pass on some of the cost burden to Welspun, as they try to avoid increasing prices for end consumers.

Despite these challenges, Jefferies remains optimistic. It mentioned that Welspun has diversified into new product categories, is building a branded business, and is expected to deliver an 18% compounded annual growth rate (CAGR) in earnings per share (EPS) between FY25 and FY28, even though FY26 is expected to be muted due to tariff-related pressures.

Jefferies estimates a subdued first half of FY26 in terms of both revenue and margins due to lower operating leverage, but expects a recovery in the second half of the fiscal year and beyond.

Welspun has multiple levers to offset tariff-related costs, according to the brokerage. It estimates a 12% CAGR in earnings before interest, tax, depreciation, and amortization (EBITDA) and an 18% EPS CAGR over FY2025–FY2028.

The company also has a strong balance sheet, a steady dividend payout policy, and a return on equity (RoE) in the mid-to-high teens.

Key risks, as per the brokerage, include unfavorable tariffs, weak consumer demand in the US and EU, and higher cotton prices.

Shares of Welspun Living Ltd. settled 2.67% higher on Wednesday at ₹134. The stock has risen 7% in the last one month.

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