Welspun Living Limited

Welspun Living reported a challenging Q1 FY26, with consolidated revenue declining 11.6% year-on-year to INR2,289 crores. This led to a significant compression in EBITDA margin, which stood at 11.1%, down 409 basis points from the previous year. Consequently, profit after tax (after minority interest) plummeted 52.8% to INR88 crores, resulting in an EPS of INR0.92 per share, down 52.3% year-on-year.

The quarter was significantly impacted by uncertain global trade flows and the implementation of reciprocal tariffs between the US and India. This created unpredictability in trade flows, affecting retailer sentiment and order patterns, leading to a cautious stance from both retailers and suppliers. Core home textile export revenue, a major segment, declined 11.8% year-on-year to INR1,885 crores, primarily due to these tariff-related headwinds and inventory corrections by retailers.

To mitigate trade uncertainties and capitalize on growth opportunities, Welspun Living is aggressively expanding its US pillow manufacturing capacity. The Ohio Pillow plant is ramping up efficiently, reaching 47% capacity utilization, and is expected to hit 70% by the end of FY26. Furthermore, the Board approved a US$13 million (INR112 crores) investment for a new pillow and TOB facility in Nevada, with an annual capacity of 10.8 million pillows, projected to be operational in Q4 FY26 and contribute over US$60 million in additional pillow revenues at full capacity.

The company is actively pursuing geographic diversification to reduce reliance on the US market, with revenue share from markets outside the US already reaching 40%. Welspun is focusing on strengthening its presence in the UK, EU, GCC, ANZ, and Japan, leveraging agreements like the India-UK FTA. Management noted positive feedback and emerging opportunities in these regions, which are expected to contribute to future growth.

In contrast to the export challenges, the domestic consumer business demonstrated resilience, growing about 10% year-on-year to INR134 crores, reflecting improving consumer sentiment. The Brand Welspun B2C business grew a robust 16% year-on-year, and the domestic flooring segment also performed strongly, growing 26% year-on-year. The company added 3 new FOFO stores, taking the total count of EBOs to 48.

Welspun Living focused on strengthening its balance sheet, reducing net debt to INR1,401 crores from INR1,603 crores last quarter. The company aims for a net debt range of INR1,300-1,400 crores for FY26 and a zero net debt position by FY28. On the ESG front, the company is progressing towards 100% renewable energy and 100% sustainable cotton by 2030, with 18-megawatt and 4-megawatt solar plants commissioned this quarter, targeting 47 megawatts of green power by year-end.

Management anticipates Q2 FY26 to remain challenging, with continued pressure on both top and bottom lines due to ongoing tariff uncertainties and trade policies. In response, the company is prioritizing prudent cost management, operational agility, and deeper customer alignment to navigate these headwinds effectively, while simultaneously strengthening the foundation for future growth.