Welspun India expects 22 per cent Ebitda growth in Q4. Continued demand in the key US market, increase in towel or bed linen capacity and realisation gains from currency depreciation may help drive 14 per cent sales growth in the fourth quarter. Ebitda margin is expected to remain similar to third quarter levels at 27 percent (up180 basis points year on year) as higher input costs (in particular, cotton) are offset by gains from currency depreciation and operating leverage.

Welspun India is a home textiles player. Tailwinds from product innovation and new segments (entry into hospitality segment, foray into wearable technologies) may help drive CAGR over 18 per cent. Capacity addition in financial year ’18 through processing lines vs. fully integrated capacity may result in lower capex per unit addition.

Although gross margins would moderate from their third quarter levels due to higher cotton prices, Welspun expects 27 per cent Ebitda margin in the fourth quarter, similar to the third quarter, due to gains from currency depreciation. Increase in capacity utilization levels and likely capacity addition in financial year ’18 (contingent on demand remaining healthy) should aid sales growth. There may be a possible 20 to 25 per cent capacity addition in financial year ’18.
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