Welspun Living Limited — Q3 FY26 earnings call

Call held 12 Feb 2026

Management summary

Welspun Living reported a challenging Q3 FY26 with a 9.9% YoY revenue decline, but demonstrated resilience with an 80 bps sequential improvement in EBITDA margin to 7.7% due to cost actions and forex gains. The company is optimistic about future growth driven by new FTAs with the US, EU, and UK, which are expected to significantly enhance India's competitiveness and market access. Domestic businesses and the Christy brand showed strong growth, while the company also reduced net debt by INR 238 crores and improved free cash flow.

Highlights

  • EBITDA margin improved sequentially by 80 bps to 7.7%, driven by sustained cost actions and forex gains.

  • Free cash flow improved meaningfully to INR 395 crores in Q3 FY26, compared to INR 112 crores in FY25, reflecting tighter working capital discipline.

  • Net debt reduced by INR 238 crores to INR 1,332 crores in December '25 from INR 1,570 crores in September '25.

  • Christy luxury heritage brand sustained strong momentum in Q3 with 31% Y-o-Y revenue growth.

  • Domestic consumer business recorded INR 185 crores, growing 4.7% Y-o-Y, with B2C home textile segment growing 6.4% and domestic flooring 14%.

Concerns

  • Consolidated revenue declined 9.9% year-on-year to INR 2,277 crores due to challenging external environment.

  • Core home textile exports declined 8.9% Y-o-Y, impacted by tariff disruptions, cautious retail behavior, and muted discretionary demand.

  • Global flooring business declined 29.2% Y-o-Y amid tariff headwinds.

  • Advanced Textile business declined 20.9% Y-o-Y to INR 104 crores due to softer global demand.

Key financials

  1. Consolidated Revenue ₹2,277 Cr -9.9%YoY
  2. EBITDA Margin 7.7% +0.8%QoQ
  3. PAT (before exceptional) ₹21.5 Cr
  4. Free Cash Flow ₹395 Cr
  5. Net Debt ₹1,332 Cr
  6. Capex ₹139 Cr

What they filed

Q1 FY27: revenue up 10.6%, net profit up 105.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue2,396 1,970 2,086 1,883 1,843 −23%1,961 −0%1,905 −9%2,083 +11%
EBITDA264 189 212 165 59 −78%80 −58%92 −57%182 +10%
Net profit176 88 98 76 148 −16%-10 −111%27 −72%156 +105%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Core Home Textile Exports
    8.9% Y-o-Y Decline
  • Christy Brand Revenue
    31% Y-o-Y Growth
  • Ohio Pillow Facility Revenue
    2× Y-o-Y Growth
  • Domestic Consumer Business
    ₹185 Cr Revenue4.7% Y-o-Y Growth
  • B2C Home Textile Segment
    6.4% Growth
  • Domestic Flooring Business
    14% Y-o-Y Growth
  • Global Flooring Business
    29.2% Y-o-Y Decline
  • Advanced Textile Business
    ₹104 Cr Revenue20.9% Y-o-Y Decline

Capital allocation

high confidence
  • Capex ₹139 Cr
    • Efficiency enhancement and ongoing transmission line projects
    Capex during this quarter was INR139 crores, primarily towards efficiency enhancement and our ongoing transmission line projects.
  • Debt Net ₹1,332 Cr
    • Repayment Net debt reduced by INR 238 crores from INR 1,570 crores as on 30th September 2025 to INR 1,332 crores in December '25. ₹238 Cr
    Our net debt stood at INR1,332 crores in December '25 versus INR1,570 crores as on 30th September 2025, lower by INR238 crores.

Guidance & targets

Capacity

  • Ohio pillow business growth Capacity · this fiscal year · High confidence double
    Our onshore Ohio pillow facility is ramping up well with revenues already 2x Y-o-Y, and we remain on track to double pillow business this fiscal year, alongside preparations for the Nevada expansion.

    — Dipali Goenka

Revenue

  • Domestic business growth (Spaces and Welspun) Revenue · next financial year · High confidence 20-25%
    So with the GST reforms, we'll see a huge opportunity here. And for the next year, the next financial year, we'll definitely see kind of a growth that we are targeting that over 20%, 25% -- and that is something that we are absolutely geared up for our brand, Spaces and Welspun in India.

    — Dipali Goenka

  • Advanced Textile business growth Revenue · Medium confidence 20%
    And these opportunities will not only come in for spunlace, which is just commodity, but needle punch where we created innovative products and also in wet wipes and the other dry wipes and the other categories that we are working on. So there, again, is an opportunity to grow this category by 20% and with a strong double-digit margin as well.

    — Dipali Goenka

Margin

  • Advanced Textile business margin Margin · Medium confidence strong double-digit margin
    And these opportunities will not only come in for spunlace, which is just commodity, but needle punch where we created innovative products and also in wet wipes and the other dry wipes and the other categories that we are working on. So there, again, is an opportunity to grow this category by 20% and with a strong double-digit margin as well.

    — Dipali Goenka

Market Share

  • Europe and Rest of World portfolio share Market Share · Medium confidence increase another 10% of the pie

    From 40% today

    So let me tell you, in our portfolio right now, America used to be around 70%. Now it is around 65%. Our portfolio will grow as a pie, where we are right now at 40% with Europe and rest of the world. This will again increase another 10% of the pie. So we want to continue to grow this market. This is what I can say as of now today.

    — Dipali Goenka

What to watch in Q4 FY26

US Tariff Competitiveness

Next couple of quarters
Current 25% punitive tariff removed, 18% expected soon
Target Clarity on reciprocal US tariffs and India's competitiveness at 18%

Why it matters

Direct impact on export competitiveness and market share in the largest market.

The India-US trade agreement removes a key overhang, the rollback of punitive tariffs, including the removal of the Russian oil-linked levy and a favourable reciprocal tariff framework, potentially around 18%, restores India's competitiveness versus the peer sourcing nations.

Risks & concerns

  • Persistent U.S. tariff headwinds

    medium

    Persistent U.S. tariff headwinds, muted discretionary demand and cautious retailer buying continued to weigh on demand visibility and volumes across export markets.

    Management acknowledged

  • Muted discretionary demand and cautious retailer buying

    medium

    Our core home textile exports declined 8.9% Y-o-Y, reflecting the residual impact of tariff-related disruptions, cautious retail behaviour and muted discretionary demand in the U.S., our largest market.

    Management acknowledged

  • Gradual nature of recovery and scaling up with new FTAs

    low

    The shift from new FTAs is not about an immediate demand rebound but a gradual process of improving visibility and competitiveness, with impacts phasing in over quarters.

    Management acknowledged

Q&A highlights

6 direct
US tariff scenario and return to normal margins post FTA Partial
So there will be that opportunity that will come in. And quarter 4, anyway, I've already spoken about, see February has already gone by. There's still a lot of conversations happen. So the year will go by. So quarter 4 still will be in that kind of a thing. But as we go forward in quarter 1, we will see a continuous upside coming in.

Clarifies that while tariffs are improving, the return to 'normal' margins will be gradual, starting from Q1 FY27, not immediate, due to supply chain dynamics and ongoing retailer conversations.

Asked by Prerna Jhunjhunwala

Status of previously outlined INR 700 crores capex plans for spinning, bath, and bed capacity Direct
So yes, so we are on track on our capex, whatever was agreed, but we are not planning additional capacity for taking care of any future business that whatever plant capacity or capex we have done, it will be enough to take care of future demand. And maybe after 2 years, we will review how it looks like.

Confirms that previously outlined capex plans are on track, but no new capacity additions are planned currently, with a focus on sweating existing assets and reviewing future needs after two years.

Asked by Shradha Agrawal

Outlook for the flooring business, particularly soft flooring, and potential for turnaround Direct
So Shradha, let me tell you, I haven't been more positive about this business than ever. I can tell you that really very categorically. With the kind of opportunity that we are seeing now with Europe and rest of the world, our soft flooring business has a massive uptake. And we will see that gradually pan out. And with a year or 2 there, our top line will also come through and our margins will also get -- will turn around.

Management expresses strong optimism for the flooring business, especially soft flooring, driven by European demand, expecting top-line growth and margin improvement within one to two years.

Asked by Shradha Agrawal

Reasons for Q3 results being better than expected despite challenging environment Direct
And that has actually given us some results in terms of performance results. And we are able to absorb the cost or hit of the tariff in these activities. And there are some forex gain also there, and that has actually helped us to mitigate some of other tariff impact. So that's the reason we're actually able to deliver better numbers.

Explains that better-than-expected results were due to internal cost management, plant efficiencies, and favorable forex gains, which helped mitigate the impact of tariffs.

Asked by Sani Vishe

Potential for high double-digit revenue growth from India given new FTAs and market access Direct
So while this all looks very good, and we are actually geared up to do what it takes to achieve the numbers of growth and even margins. But Ashutosh, it will all now we see if I look at it, U.S. will happen in next year only. U.K. will happen in the next couple of quarters. We will definitely see that upside happening. But -- there would be other elements that we should be even looking at in the terms of this dynamic environment. But Ashutosh, just to give you a perspective, we are feeling very positive about the kind of upswing we'll have in this business.

Management confirms readiness to capitalize on new market opportunities from FTAs, expecting significant upside, though with a phased timeline for impact across different geographies.

Asked by Ashutosh Somani

Growth drivers for the EU market and its potential contribution to the portfolio mix Direct
So let me tell you, in our portfolio right now, America used to be around 70%. Now it is around 65%. Our portfolio will grow as a pie, where we are right now at 40% with Europe and rest of the world. This will again increase another 10% of the pie. So we want to continue to grow this market. This is what I can say as of now today.

Provides a specific target for increasing the share of Europe and Rest of World in the overall portfolio by 10 percentage points, indicating a strategic shift towards diversification beyond the US market.

Asked by Aradhana Jain

Impact of AI on efficiency, productivity, and competitiveness in the textile industry Direct
And when you talk about AI and the workforce, see, you already know that textile is a very labour-intensive industry, right? To get efficiency, to get productivity. Al will be a very interesting element that we are actually exploring and continue to implement in a smaller way and continue to grow that because it's going to be a very big element going forward to keep us competitive here.

Highlights AI as a key strategic tool for improving efficiency and productivity in the labor-intensive textile industry to maintain and enhance competitiveness.

Asked by Rohit Ohri

2 min read 6 chapters

Detailed narrative

Q3 FY26 Performance Amidst Challenging Environment

Welspun Living reported a consolidated revenue of INR 2,277 crores in Q3 FY26, marking a 9.9% year-on-year decline. Despite this, the company demonstrated operational resilience, with EBITDA margin improving sequentially by 80 basis points to 7.7%. This improvement was attributed to sustained cost actions, operating discipline, and favorable forex realization, which helped mitigate the impact of elevated tariff pressures and adverse mix. Profit after tax before exceptional items stood at INR 21.5 crores for the quarter.

Strategic Advantage from New Trade Agreements

The company highlighted a decisive shift in India's global trade landscape, with new FTAs including India-US, India-EU, and India-UK. These agreements are expected to significantly expand market access, improve tariff competitiveness, and reinforce India's position as a preferred sourcing destination for global retailers. Management emphasized that this structural shift, while not leading to an immediate demand rebound, will enhance long-term visibility and competitiveness for global customers planning sourcing strategies.

Domestic Business and Brand Performance Highlights

The domestic consumer business recorded INR 185 crores, growing 4.7% year-on-year, with the B2C home textile segment growing 6.4% and domestic flooring business growing 14%. The Christy luxury brand sustained strong momentum with 31% year-on-year revenue growth, driven by UK strength and Middle East market entry. The Ohio pillow facility also saw revenues double year-on-year and is on track to double its business this fiscal year.

Challenges in Export Segments and Future Outlook

Core home textile exports declined 8.9% year-on-year, impacted by tariff disruptions and muted discretionary demand in the US. The global flooring business also declined 29.2% year-on-year due to tariff headwinds, and the advanced textile business saw a 20.9% decline to INR 104 crores. However, management expressed optimism for a gradual recovery in volumes and significant upside in soft flooring and advanced textiles, especially with the new FTAs.

Disciplined Capital Allocation and Cost Optimization

Welspun Living demonstrated strong cash generation, with free cash flow improving significantly to INR 395 crores in Q3 FY26, compared to INR 112 crores in FY25. Net debt was reduced by INR 238 crores to INR 1,332 crores as of December 2025, from INR 1,570 crores in September 2025. Capex for the quarter was INR 139 crores, primarily focused on efficiency enhancement and existing capacity utilization, with no plans for additional capacity in the near term, focusing on sweating assets.

Innovation and Sustainability as Core Pillars

Innovation, backed by an IP portfolio of over 48 patents, accounts for 20% of revenues and drives premium positioning. The company's sustainability efforts were recognized with a #1 global ranking in the textile, apparel, and luxury goods category by S&P Global Corporate Sustainability Assessment. Management also noted the exploration and implementation of AI to enhance efficiency and productivity in the labor-intensive textile industry, aiming to maintain competitiveness.

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