Q1 2027 Welspun Living Ltd Earnings Call

Speaker #4: Ladies and gentlemen, good day and welcome to the Welspun Living Q1 FY27 earnings conference call, hosted by 361 Capital Market. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes.

Operator 2: Ladies and gentlemen, good day and welcome to Welspun Living Q1 FY27 Earnings Conference Call, hosted by 361 Capital Market. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Aradhana Jain from 361 Capital Market. Thank you, and over to you, ma'am.

Speaker #4: Should you need assistance during the conference call, please signal an operator by pressing star, then zero, on your touch-tone phone. Please note that this conference is being recorded.

Speaker #4: I now hand the conference over to Ms. Aradhana Jen from 361 Capital Market. Thank you, and over to you, ma'am.

Speaker #5: Thank you, Yusuf. Good evening, everyone. On behalf of 361 Capital, I welcome all participants and the management of Welspun Living to the Q1 FY27 conference call.

Aradhana Jain: Thank you, Yusuf. Good evening, everyone. On behalf of 361 Capital, I welcome all participants and the management of Welspun Living to the Q1 FY27 conference call. Without much ado, I hand over the call to Ms. Bharti Agarwal, head investor relations, Welspun Living, to introduce the management. Over to you, Bharti.

Speaker #5: Without much ado, I hand over the call to Ms. Bharati Agarwal, Head of Investor Relations at Welspun Living, to introduce the management. Over to you, Bharati.

Speaker #6: Thank you, Aradhana, and good evening, everyone. On behalf of Welspun Living Limited, I would like to welcome you all to the first quarter of FY2027 earnings call.

Bharti Agarwal: Thank you, Aradhana, and good evening, everyone. On behalf of Welspun Living Limited, I would like to welcome you all to the first quarter of FY2027 earnings call. On this forum today, we have Ms. Deepali Goenka, managing director and CEO, Mr. Manish Sansan, chief financial officer, and also Mr. Harsh Rungta, group head investor relations, Welspun World. Apologies for the delay in filing the results due to some technical glitches. We hope you have had the opportunity to review the earnings presentation, which has been filed with the exchanges today and is also available on our website. During the course of today's discussion, we may make references from this presentation. As usual, we will begin with the opening remarks from the management, following which we will open the floor for a Q&A session. Should you have any additional questions after the call, please feel free to reach out to us.

Speaker #6: On this forum today, we have Ms. Deepali Goenka, Managing Director and CEO; Ms. Manish Bansal, Chief Financial Officer; and Mr. Harish Rota, Group Head, Investor Relations, Welspun World.

Speaker #6: Apologies for the delay in filing the results. Due to some technical glitches, we hope you've had the opportunity to review the earnings presentation, which has been filed with the exchanges today and is also available on our website.

Speaker #6: During the course of today's discussion, we may make references to this presentation. As usual, we'll begin with the opening remarks from the management, following which we will open the floor for a Q&A session.

Speaker #6: Should you have any additional questions after the call, please feel free to reach out to us. With that, I would now like to hand over the call to Ms. Deepali Goenka. Over to you, ma'am.

Bharti Agarwal: With that, I would now like to hand over the call to Ms. Deepali Goenka. Over to you, ma'am.

Speaker #7: Thank you, Bharati. Good evening, everyone, and thank you for joining us for Welspun Living's Q1 FY27 earnings call. We have started FY27 on a strong note, delivering broad-based growth across our businesses, continued margin expansion, and further strengthening of our balance sheet.

Dipali Goenka: Thank you, Bharti. Good evening, everyone, and thank you for joining us for Welspun Living's Q1 FY27 earnings call. We have started FY27 on a strong note, delivering broad-based growth across our businesses, continued margin expansion, and further strengthening of our balance sheet. We had the strongest quarter in seven quarters with our consolidated revenues growing 23.5% year on year and 15.4% sequentially to INR 2,828 crores, while EBITDA margins expanded to 12.5%, improving by 140 basis points year on year and 170 basis points sequentially, driven by healthy volume recovery, operating leverage, and an improving business mix. Profit after tax nearly doubled, with PAT margins improving from 3.8% to 5.7%. More importantly, Q1 revenue is 9% above the same quarter of FY25, the pre-tariff baseline. We are not simply returning to where we were, we are ahead of it.

Speaker #7: We had the strongest quarter in seven quarters, with consolidated revenues growing 23.5% year on year and 15.4% sequentially, to ₹2,828 crore, while EBITDA margins expanded to 12.5%, improving by 140 basis points year on year and 170 basis points sequentially, driven by healthy volume recovery.

Speaker #7: Operating leverage and an improving business mix. Profit after tax nearly doubled, with PAT margins improving from 3.8% to 5.7%. More importantly, Q1 revenue is 9% above the same quarter of FY25, the pre-tariff baseline.

Speaker #7: We are not simply returning to where we were; we are ahead of it. Margin expansion is now in its third consecutive quarter, from 6.8% at the trough to 12.5% today, and it is structural, not circumstantial.

Dipali Goenka: Margin expansion is now in its third consecutive quarter from 6.8% at the trough to 12.5% today, and it is structural, not circumstantial. Across our manufacturing network, we have been systematically simplifying processes, accelerating automation, and deploying AI tools and Industry 4.0 technologies on our shop floors to drive sustainable efficiencies. These are capabilities that compound. The organization we are building is genuinely different from the one that entered the tariff disruption. The macro environment is more constructive than it was a year ago. The recently announced US tariff framework has currently preserved India's competitive position. The India-US BTA talks are progressing, and we remain optimistic of a positive outcome. India's moment in the UK market has arrived and presents a significant growth opportunity for Indian manufacturers.

Speaker #7: Across our manufacturing network, we have been systematically simplifying processes, accelerating automation, and deploying AI tools and Industry 4.0 technologies on our shop floors to drive sustainable efficiencies.

Speaker #7: These are capabilities that compound. The organization we are building is genuinely different from the one that entered the tariff disruption. The macro environment is more constructive than it was a year ago.

Speaker #7: The recently announced U.S. tariff framework has currently preserved India's competitive position. India's U.S. BTA talks are progressing, and we remain optimistic of a positive outcome.

Speaker #7: India's moment in the UK market has arrived and presents a significant growth opportunity for Indian manufacturers. The India-UK pre-trade agreement, effective July 15, puts India on an equal tariff footing with Pakistan, which currently holds over 50% of UK home textile imports.

Dipali Goenka: The India-UK free trade agreement, effective 15 July, puts India on an equal tariff footing with Pakistan, which today holds over 50% of UK home textile imports. We are not starting from scratch here. Christy, our global brands relationships, and an established retailer network mean we are already embedded in this market and ready to scale. Our UK and Europe businesses delivered 20% plus growth this quarter. The runway ahead is significant, and we expect double-digit growth in our UK businesses over the coming years. Home textiles exports grew 28.1% year on year, our strongest quarter in recent years. Behind that number sits a business that is difficult to replicate. We continue to be the world's largest exporter of terry towels. That position is not just maintained by scale alone. It is built on technology, innovation, and customer trust accumulated over three decades. Our IP portfolio stands at 50 patents.

Speaker #7: We are not starting from scratch here. Christie, our Disney brand relationships and our established retailer network mean we are already embedded in this market and ready to scale.

Speaker #7: Our UK and Europe businesses delivered 20% plus growth this quarter. The runway ahead is significant, and we expect double-digit growth in our UK businesses over the coming years.

Speaker #7: Home textiles exports grew 28.1% year on year—our strongest quarter in recent years. Behind that number sits a business that is difficult to replicate.

Speaker #7: We continue to be the world's largest exporter of terry towels. That position is not achieved by scale alone. It is built on technology, innovation, and customer trust accumulated over three decades.

Speaker #7: Our IP portfolio stands at 50 patents. That is the most, and it is deepening. Innovation-led sales grew 16% this quarter, and contributed approximately 25% of our revenue.

Dipali Goenka: That is a moat, and it is deepening. Innovation led sales grew 16% this quarter and contributed approximately 25% of our revenue. Our US onshore pillow businesses grew 2.3x this quarter. The Ohio pillow facility has ramped up to around 81% utilization. Our Nevada facility has commenced operations and is building momentum in SKU category. Together, these facilities strengthen our customer proximity, improve speed to market, and enhance supply chain agility. We are on track to double revenue to reach USD 60 million this year. On our branded businesses, Christy delivered 15% growth this quarter, supported by strong UK performance and expanding presence in the Middle East and growing traction in the United States. Welhome is increasing acceptance across North America, Japan, and newer markets. The recently concluded Wimbledon Championships was watched by millions of fans around the world.

Speaker #7: Our U.S. onshore pillar businesses grew 2.3x this quarter. The Ohio pillar facility has ramped up to around 81% utilization. Our Nevada facility has commenced operations and is building momentum in the sleep category.

Speaker #7: Together, these facilities strengthen our customer proximity, improve speed to market, and enhance supply chain agility. We are on track to double revenue to reach $60 million this year.

Speaker #7: On our branded businesses, Christie delivered 16% growth this quarter, supported by strong UK performance and expanding presence in the Middle East, as well as growing traction in the United States.

Speaker #7: Well, Home is increasing acceptance across the North America, Japan, and New York markets. The recently concluded Wimbledon Championships was watched by millions of fans around the world.

Speaker #7: Every towel on the center court was a Christie towel, continuing a proud partnership spanning nearly four decades. The Christie monogram woven into our signature hydrocotton towels featured in courtside moments, flair interviews, and iconic images throughout the tournament, bringing together 175 years of British textile heritage and modern manufacturing excellence.

Dipali Goenka: Every towel on the center court was a Christy towel, continuing a proud partnership spanning nearly four decades. The Christy monogram woven into our signature HygroCotton towels, featured in courtside moments, player interviews, and iconic images throughout the tournament, bringing together 175 years of British textile heritage and modern manufacturing excellence. In India, our domestic businesses grew 21.3% year-on-year, sustaining the trajectory from Q4 with Just Fun and SPACES continuing to strengthen their presence across key channels. Our B2B and B2C both grew in strong double digits. The ongoing shift from the unorganized to the organized home textiles market continues to be a structural tailwind for our businesses. Our widely distributed brand positions us well to capture an increasing share of this opportunity. In Flooring, our turnaround efforts are also beginning to deliver visible results.

Speaker #7: In India, our domestic businesses grew 21.3% year-on-year, sustaining the trajectory from Q4, with Welspun and Spaces continuing to strengthen their presence across key channels.

Speaker #7: Our B2B and B2C both grew, and strong double digits. The ongoing shift from the unorganized to the organized home textiles market continues to be a structural tailwind for our businesses.

Speaker #7: Our widely distributed brand position is helping us capture an increasing share of this opportunity. In flooring, our turnaround efforts are also beginning to deliver visible results.

Speaker #7: EBITDA margins materially improved to 10.4%, the highest in over two years, reflecting operational discipline and the structural actions taken over the past year. Alongside improving profitability, we are diversifying beyond the U.S.

Dipali Goenka: EBITDA margins materially improved to 10.4%, highest in over two years, reflecting operational discipline and structural actions taken over the past year. Alongside improving profitability, we are diversifying beyond the US into markets such as Australia and Canada through strategic partnerships and strengthening our presence in commercial Flooring. Our continued commitment to exports, innovation, and sustainability was also recognized during the quarter at the Texprocil Export Awards 2026, where Welspun Living received the Platinum Trophy for the highest global exports and Gold Trophy for innovation and excellence in ESG. These recognitions reinforce the differentiated position we have built in the global marketplace. Before I close, I would like to briefly address the unprecedented flooding at our Vapi facility. Post the incident, our immediate priority was the safety of our people, and within a few hours, every person on site was evacuated safely.

Speaker #7: into markets such as Australia and Canada, to strategic partnerships and strengthening our presence in commercial flooring. Our continued commitment to exports, innovation, and sustainability was also recognized during the quarter at the Textile Export Awards 2026, where Welspun Living received the platinum trophy for the highest global exports and gold trophies for innovation and excellence in ESG.

Speaker #7: These recognitions reinforce the differentiated position we have built in the global marketplace. Before I close, I would like to briefly address the unprecedented flooding at the Abapi facility.

Speaker #7: Post the incident, our immediate priority was the safety of our people, and within a few hours, every person on site was evacuated safely. Operations partially resumed within a week and are expected to be restored in a safe manner.

Dipali Goenka: Operations partially resumed within a week and are expected to be restored in a phased manner. Our teams responded swiftly by activating contingency plans and rerouting production. We are fully insured and are working closely with our insurance providers to facilitate the claims process. What stays with me from this episode is not just the disruption, but the response, the agility, and ownership demonstrated by our teams reinforcing the resilience of organization. That is the Welspun spirit. To conclude, we remain focused on building on this resilience and translating it into sustainable growth and profitability. We remain confident of delivering double-digit revenue growth and EBITDA margins in the low teen for FY27 and remain well-positioned to capitalize on the opportunities ahead. With that, I will hand over to Manish to take you through the financial performance. Over to you.

Speaker #7: Our teams responded swiftly by activating contingency plans and rerouting production. We are fully insured and are working closely with our insurance providers to facilitate the claims process.

Speaker #7: What stays with me from this episode is not just the disruption, but the response: the agility and ownership demonstrated by our teams, reinforcing the resilience of organizations.

Speaker #7: That is the Wellspun spirit. To conclude, we remain focused on building on this resilience and translating it into sustainable growth and profitability. We remain confident of delivering double-digit revenue growth and EBITDA margins in the low teens for FY27, and remain well-positioned to capitalize on the opportunities ahead.

Speaker #7: With that, I will hand over to Manish to take you through the financial performance. Over to you.

Speaker #1: Thank you, Deepali, and good evening, everyone. I will keep my remarks brief. We have started FY27 with a strong financial performance, reflecting broad-based growth across our business and continued improvement in profitability.

Manish Sansan: Thank you, Deepali, and good evening, everyone. I will keep my remarks brief. We have started FY27 with a strong financial performance, reflecting broad-based growth across our business and continued improvement in profitability. Consolidated revenue grew 23.5% year-on-year and 15.4% sequentially to approximately INR 2,828 crore. EBITDA margin improved to 12.5%, expanding by 140 basis points year-on-year and 170 basis points sequentially. This marks our third consecutive quarter of margin improvement. The improvement in profitability was driven by a combination of healthy volume recovery, operating leverage, better business mix, and sustained cost optimization initiatives across the organization. At the same time, our ongoing focus on manufacturing productivity, procurement efficiencies, automation, and process improvements continue to strengthen our underlying cost structure. These structural initiatives are expected to support sustainable margin improvement as volume continue to recover.

Speaker #1: Consolidated revenue grew 23.5% year-on-year, and 15.4% sequentially, to approximately ₹2,828 crore. While EBITDA margin improved to 12.5%, expanding by 140 basis points year-on-year and 170 basis points sequentially, this marks our third consecutive quarter of margin improvement.

Speaker #1: The improvement in profitability was driven by a combination of healthy volume recovery, operating leverage, better business mix, and sustained cost optimization initiatives across the organization.

Speaker #1: At the same time, our ongoing focus on manufacturing productivity, procurement efficiencies, automation, and process improvements continues to strengthen our underlying cost structure. These structural initiatives are expected to support sustainable margin improvement as volume continues to recover.

Speaker #1: Alongside improving profitability, we have continued to strengthen the quality of our balance sheet through disciplined working capital management, healthy cash generation, and prudent capital allocation.

Manish Sansan: Alongside improving profitability, we have continued to strengthen the quality of our balance sheet through disciplined working capital management, healthy cash generation, and prudent capital allocation. Our capital allocation philosophy remains unchanged. We continue to invest selectively behind projects that enhance productivity, improve operational efficiency, and strengthen our long-term competitiveness. As part of this approach, the board approved a INR 121 crore de-bottlenecking and modernization project at our Anjar facility in July, which will replace older technology with more advanced technology, improve plant utilization, and enable us to drive several evolving markets demands. This forms a part of our overall FY27 capital expenditure. Overall, we continue to expect FY27 capital expenditure in the range of INR 400 to 500 crore. In parallel, we have also made significant progress in transitioning the Anjar manufacturing complex towards a greener power ecosystem.

Speaker #1: Our capital allocation philosophy remains unchanged. We continue to invest selectively behind projects that enhance productivity, improve operational efficiency, and strengthen our long-term competitiveness. As part of this approach, the Board approved a ₹121 crore debottlenecking and modernization project at the RN Jar facility.

Speaker #1: In July, which will replace older technology with more advanced technology, improve plant utilization, and enable us to drive evolving market demands. This forms a part of our overall FY27 capital expenditure.

Speaker #1: Overall, we continue to expect FY27 capital expenditure in the range of ₹400 to ₹500 crore. In parallel, we have also made significant progress in transitioning the Anjar manufacturing complex towards a greener power ecosystem. With the commissioning of the CTU line, the facility commenced receiving 100% green power supply from mid-July 2026.

Manish Sansan: With this commissioning of the CPSU line, the facility commenced receiving 100% green power supply from mid-July 2026. This marks an important step in advancing our sustainability commitments. With Anjar now fully powered by green energy, 79% of Welspun Living total power consumption is now green. On the tariff refunds, the process is progressing in line with the applicable regulatory framework. We have initiated the necessary procedures for eligible claims and wherever applicable, have started receiving refunds. The timings and quantums remain subject to completion of the administrative process. Looking ahead, our priorities remain unchanged. We remain focused on improving not just growth, but the quality of growth by strengthening cash generation, enhancing asset productivity, maintaining disciplined capital allocation, and delivering sustainable improvement in return ratios.

Speaker #1: This marks an important step in advancing our sustainability commitments, with Anjar now fully powered by green energy. Seventy-nine percent of Welspun Living’s total power consumption is now green.

Speaker #1: On the tariff refunds, the process is progressing in line with the applicable regulatory framework. We have initiated the necessary procedures for eligible claims and, wherever applicable, have started receiving refunds.

Speaker #1: The timings and quantums remain subject to completion of the administrative process. Looking ahead, our priorities remain unchanged. We remain focused on improving not just growth, but the quality of growth by strengthening cash generation, enhancing asset productivity, maintaining disciplined capital allocation, and delivering sustainable improvement in return ratios.

Speaker #1: We continue to target an improvement in ROCE to the low teens during FY27 and believe our strengthened financial position provides a solid foundation to support the company’s next phase of profitable growth.

Manish Sansan: We continue to target an improvement in ROCE to the low teens during FY27 and believe our strengthened financial position provide a solid foundation to support the company's next phase of profitable growth. With that, we will now be happy to take your questions.

Speaker #1: With that, we would now be happy to take your questions.

Speaker #2: Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone.

Operator 2: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is from the line of Soham Samanta from Motilal Oswal. Please go ahead.

Speaker #2: If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use a handset while asking a question.

Speaker #2: Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question is from the line of Sohan Samantha from Motilal Oswal. Please go ahead.

Speaker #1: Yes, thanks for the opportunity. So, ma'am, I just wanted to check a couple of points. Why did the gross margin decline this quarter? Any particular reason?

Soham Samanta: Yeah, thanks for the opportunity. Suman, just wanted to check couple of points. Why the gross margin declined in this quarter? Any particular reason? I know that raw material has been an inflation trend. Anything you want to highlight on this particular point?

Speaker #1: I mean, I know that raw metal has been an inflationary trend. Is there anything you want to highlight on this particular point?

Speaker #3: It's primarily because of the raw materials. And, you know, if you look at it, even going forward, the raw materials will be something that we'll have to watch out for.

Dipali Goenka: It is primarily because of the raw materials. If you look at it even going forward, the raw materials will be something that we will have to watch out for. Of course, the macroeconomics factors are also playing, whether it is your crude that you are seeing, and cotton. These are the two important ones that we can really talk about here.

Speaker #3: And, of course, the macroeconomic factors are also in play, whether it's your crude that you're seeing, and cotton, I mean. So these are the two important ones that, you know, we can really talk about here.

Speaker #1: So, for the next couple of quarters, will it be the same range, assuming that raw material remains at a similar level as it is now?

Soham Samanta: For next couple of quarters, will it be in the same range, assuming that raw material is in the similar level as of now?

Speaker #3: Yes, yes. I mean, we will maintain, you know, the numbers that we are projecting today as well.

Dipali Goenka: Yes, we will maintain the numbers that we are projecting today as well.

Speaker #1: Got it. Second thing, being home textile—if I just look at our volume numbers in home textile, bed and bath: in bath, I have seen a 2% volume growth, and bed volume was down.

Soham Samanta: Got it. Second thing, within home textile, if I just look our volume numbers in home textile, bed and bath. Bath, I have seen the 2% volume growth and bed, the volume is down. Just wanted to check, most of the growth came from a realization, right, for this quarter, in home textile?

Speaker #1: So, just wanted to check—most of the growth came from realizations, right, for this quarter? Is it home textile?

Dipali Goenka: No, it is a mix of volume and value. There are a lot of times there is a lot of GIT factor also that comes into play. It is everything that is realized in this quarter. You must appreciate, in the textiles as we dispatch, it takes 50 to 60 days. Definitely there is that kind of a stagger effect in this.

Speaker #3: No, no. It is a mix of volume and value. And, you know, there are a lot of times there's a lot of GT factor also that comes into play.

Speaker #3: So, it is everything that is realized in this quarter. And you must appreciate, you know, in the textiles, as we—despite it takes 50 to 60 days, you know, so definitely there is that kind of a stagger effect in this.

Speaker #1: Okay, okay. And one follow-up on that: one of our competitors has pointed out some issues with container availability and all. So for us, there is no kind of issue we have faced in this quarter, right?

Soham Samanta: Okay. One follow-up in that, one of our competitors have pointed out that some issue on this container availability and all. For us, there is no any kind of issues we have faced in this quarter, right?

Speaker #3: No, let me just tell you a few things here. We have long-term partnerships with all the freight carriers. And that has yielded results. And whatever we will continue to do, it'll it'll be in the terms of, you know, you know, a path that we are very comfortable with.

Dipali Goenka: Let me just tell you a few things here. We have long-term partnerships with all the freight carriers, and that has yielded results. Whatever we will continue to do, it will be in the terms of a path that we are very comfortable with. The market rates have increased, but our impacts to the customer dispatches will not be impacted here.

Speaker #3: And the market rates have increased, but, you know, our impact to the customer dispatches will not be affected here.

Speaker #1: Okay, and last question from my side. When we're saying double-digit revenue growth, are we indicating mid-teens or mid- to high-teens?

Soham Samanta: Okay. Last question from my side. When we are saying that double-digit revenue growth, so we are indicating on mid-teens or mid to high teens? How we are indicating the numbers for next couple of years?

Speaker #1: How are we indicating the numbers for the next couple of years?

Speaker #3: I mean, you've seen the growth this time, and we will maintain it.

Dipali Goenka: You have seen the growth this time, and we will maintain.

Speaker #1: Okay, okay. Thank you very much. Thank you.

Soham Samanta: Okay. Thank you very much.

Dipali Goenka: Thank you.

Speaker #3: Thank you.

Speaker #2: Thank you. Next question is from the line of Priyanka Janjanwala from Elara Securities. Please go ahead.

Operator 2: Thank you. Next question is from the line of Prerna Jhunjhunwala from Elara Securities. Please go ahead.

Speaker #4: Hi, thank you for the opportunity. I just wanted to understand the bed linen utilization rates. Are we seeing further traction with the UKFTA? And can we assume that it will be about 80% for the year as a whole?

Prerna Jhunjhunwala: Hi, thank you for the opportunity. Just wanted to understand the bed linen utilization rates. Are we seeing further traction with UKFTA? Can we assume that it will be about 80% for the year as a whole or any color on the utilization rates for bed linen that we can expect for this full year?

Speaker #4: Or any color on the utilization rates for bed linen that we can expect for this full year?

Speaker #3: Priyanna, our utilizations will be over 80% across, and that's what you will see, you know, you'll continue to see. And it'll be, you know, with our mix that we have and, you know, with the US, UK, Europe, and the rest of the world, we have a very healthy mix.

Dipali Goenka: Prerna, our utilizations will be over 80% across. That is what you will continue to see. With our mix that we have, and you know it, with the US, UK, Europe, rest of the world, we have a very healthy mix of retailers. That goes without saying that we will continue to grow and expand across all geographies. Our utilizations, in fact, across all our verticals will be around 80%.

Speaker #3: ...of retailers. So that goes without saying that we will continue to grow and expand across all the geographies. Our utilization, in fact, across all our verticals will be around 80%.

Speaker #4: Okay. Okay. Understood. And, ma'am, what kind of traction are we having with UK and European clients? Have they started giving orders, given the UK FTA has been signed?

Prerna Jhunjhunwala: Okay. Understood. What kind of traction are we having with UK and European clients? Have they started giving orders given the UKFTA has been signed? Yeah.

Speaker #4: And yeah.

Speaker #3: Sorry, sorry, Priyanna. You can continue if you have to.

Dipali Goenka: Sorry, Prerna. You can continue if you have to.

Speaker #4: No, I just wanted to check on this—whether European clients are also looking to diversify their sourcing, because it is largely sourcing from one particular country. So...

Prerna Jhunjhunwala: No, I just wanted to check on this, that whether European clients are also looking forward to diversifying their sourcing because it is largely sourcing from one particular country.

Dipali Goenka: Yeah.

Speaker #4: How are we seeing that geography, that these two geographies, playing out?

Prerna Jhunjhunwala: How are we seeing these two geographies playing out?

Speaker #3: Actually, I think I can talk about India also here, Priyanna. And as the FTAs have opened up for the UK, then Europe is right around the corner.

Dipali Goenka: Actually, I think I can talk about India also here, Prerna. As the FTAs have opened up for UK, then Europe is right around the corner, and the other countries also just coming through. We are in a very good position as a country. For Welspun as well, as you already know, UK we actually had a 20% growth. So we already are in this market, but we can also see a big upside. As you already know that Pakistan actually controls around 50% of the shares in UK. When you talk about Europe as well, they are the retailers we already are working with, and we see a great upside there as well. To your question, yes, UK and Europe are going to have an upside for us with the FTA as well.

Speaker #3: And the other countries are also just coming through. We are in a very good position as a country. And for Welspun as well, as you already know, in the UK, we actually had a 20% growth.

Speaker #3: So we are already in this market, but we can also see a big upside. As you already know, Pakistan actually controls around 50% of the share in the UK.

Speaker #3: When you talk about Europe as well, these are the retailers we are already working with, and we see great upside there as well.

Speaker #3: To your question, yes, the UK and Europe are going to present an upside for us with the FTA as well.

Speaker #4: And has the order info started, ma'am? Just wanted to understand from that perspective, at least for the UK, because Europe is still around the corner.

Prerna Jhunjhunwala: Has the order inflow started, ma'am? Just wanted to understand from that perspective for at least UK, because Europe is still around the corner, but UK is already implemented.

Speaker #4: But UK is already implemented.

Speaker #3: Yes. Yes, Priyanna. And I mean, this already started with the conversations that had begun when the FTA discussions had begun. So, the inflow—see, it is a process, Priyanna.

Dipali Goenka: Yes, Prerna. This already started with the conversations that had begun, when the FTA conversations had begun. So the inflow, see, it is a process, Prerna. As we approve the product, then it is kind of a product development. It is a cycle. So the discussions have begun, approvals are happening, confirmations are there. So this will gradually come into our system.

Speaker #3: As we approve, you know, the product, then it is kind of a product development. So it's a cycle. So the discussions have begun.

Speaker #3: Approvals are happening, confirmations are there, so this is gradually coming into our system.

Speaker #4: Okay, okay. Understood. Second question is on the flooring part. One of the best margins that you have reported in this quarter, at around 10%, 10.2%.

Prerna Jhunjhunwala: Okay. Understood. The second question is on the Flooring part. One of the best margins that you have reported in this quarter at around 10%.

Dipali Goenka: Yeah.

Prerna Jhunjhunwala: 10.2%.

Speaker #4: I just wanted to understand the levers that help to improve the margins, and whether they are sustainable?

Dipali Goenka: Yeah.

Prerna Jhunjhunwala: Just wanted to understand the levers that helped to improve

Dipali Goenka: Yeah

Prerna Jhunjhunwala: the margins and are they sustainable?

Speaker #3: So in the in the flooring, the important thing actually is a strategic shift towards soft flooring. Where, you know, our categories which are in the terms of area rugs and the others, you know, we have actually focused on quality products.

Dipali Goenka: In the Flooring, the important thing actually is a strategic shift towards soft Flooring, where our categories, which are in the terms of area rugs and the others. We have actually focused on qualitative products. The margins, hence, definitely have seen an upside. Along with that, focusing on different partnerships, like with Australia, New Zealand, and Canada. There is a target. There is a certain target of products, there is a certain target of margin, and also we are looking at our costs as well. Overarchingly, it has held us in good stead, and it will continue to do so.

Speaker #3: So here, the margins have definitely seen an upside. Along with that, we're focusing on different partnerships, like with Australia, New Zealand, and Canada.

Speaker #3: So there is a target. There's a certain target for products, there's a certain target for margins, and also we are looking at the cost as well.

Speaker #3: So, overarchingly, it has held us in good stead, and it'll continue to do so.

Speaker #4: So, we can now safely assume a 10-odd percent margin for the entire year and going forward. Is this doable?

Prerna Jhunjhunwala: We can now safely assume 10% or 15% margins for the entire year and going forward. Is

Dipali Goenka: Yes

Prerna Jhunjhunwala: this doable?

Speaker #3: Yes. Yes, Priyanna. Mostly yes. Yeah.

Dipali Goenka: Yes, Prerna.

Prerna Jhunjhunwala: Okay.

Dipali Goenka: Yes. Yeah.

Speaker #4: Oh, thanks. I'll come back to the question too, Priyanna, for the question. Thank you, ma'am, and all the rest.

Prerna Jhunjhunwala: Oh, thanks. I will come back to the question queue for another question. Thank you, ma'am, and all the best.

Speaker #3: Thank you, Priyanna.

Dipali Goenka: Thank you, Prerna.

Speaker #2: Thank you. Next question is from the line of Roshan Nair from Antique Stockbroking. Please proceed.

Operator 2: Thank you. Next question is from the line of Roshan Nair from Antique Stock Broking. Please proceed.

Speaker #1: Yeah, thanks for the opportunity, and congratulations on a good set of numbers. So your margins have expanded to around 11.5%. Can you help me understand whether this is a bigger structural change happening on the demand side, or is it because of the company's internal efficiencies?

Roshan Nair: Yeah, thanks for the opportunity and congratulations on good set of numbers. Your margins have expanded to around 11.5%. Can you help me understand whether this is a bigger structural change that is happening on the demand side, or is it because of the company's internal efficiencies? And what is the scope for further improvement and in which areas?

Speaker #1: And what is the scope for further improvement, and in which areas?

Speaker #3: So, I think there are three clean drivers that you are seeing: the volume recovery, tariff share, and winding converting into operational leverage. On a largely fixed cost base, the business mix is improving.

Dipali Goenka: Well, I think there are three key drivers that we are seeing. The volume recovery and tariff share, and my team converting into operational leverage on the largely fixed cost base. The business mix is improving. That is the second one. Third is the cost discipline. The structural cost actions that are taken over last year, reducing energy cost, automation improving, and the throughput, I think, has held us in a good stead. As we have already spoken, a full year guidance for EBITDA margins will be targeting around low teens, and that is what it is going to be.

Speaker #3: That is the second one. Third is the cost discipline. The structured cost actions that are taken over last year reducing energy cost, automation improving, and the throughput.

Speaker #3: I think they have held us in good stead. So, you know, as we have already spoken, the full-year guidance for EBITDA margins will be targeting around the low teens.

Speaker #3: And that's what it is going to be.

Speaker #1: Understood. That's helpful. And also, can you quantify the impact that could come up in this quarter due to the floods? Maybe some idea over there.

Roshan Nair: Understood. That is helpful. Can you quantify the impact that can come up in this quarter due to the floods? Maybe some idea over there.

Speaker #3: So with WAPI, if I can say that we have covered with the insurance adequately. And quarter two, we'll be cover quarter two will be impacted because, you know, that, you know, it has been an onslaught right now and it has been very tough.

Dipali Goenka: Well, with Vapi, if I can say that we are covered with the insurance adequately. Q2 will be impacted because it has been an onslaught right now, and it has been very tough. However, I can tell you that Q3, Q4, we are going to restore. Annually, if I look at my growth at Welspun Living, it will continue to give a double-digit growth, and we will be on the track.

Speaker #3: But however, I can tell you that in Q3 and Q4, we are going to restore. So annually, if I look at my growth as Welspun Living, it will continue to give double-digit growth.

Speaker #3: And we'll be on track.

Speaker #1: Understood. That's helpful. Thank you so much, and wish you all the best for the coming quarters.

Roshan Nair: Understood. That is helpful. Thank you so much, and wish you all the best for the coming quarters.

Speaker #3: Thank you so much.

Dipali Goenka: Thank you so much.

Speaker #2: Thank you. Next question is from the line of Bhavin Cheda from Inam Holdings. Please go ahead.

Operator 2: Thank you. Next question is from the line of Bhavin Chheda from Enam Holdings. Please go ahead.

Speaker #1: Yeah. Congratulations to the entire team for very strong numbers and a positive outlook as well. Ma'am, a couple of questions. First, I missed out on the capacity utilization.

Bhavin Chheda: Yeah. Congratulations to the entire team for very strong numbers and a positive outlook also. Ma'am, couple of questions. First, I missed out on the capacity utilization across segment, what you are targeting for the entire fiscal. Because the bed linen, I believe, was 60% in Q1. So what's the outlook going forward?

Speaker #1: Across segments, what are you targeting for the entire fiscal year? Because bed linen, I believe, was at 60% in Q1. So what's the outlook going forward?

Speaker #3: Our utilization annually is going to be 80% across all the categories. Let me just be very, very clear on that—whether it's our travels, whether it's sheets or rugs.

Dipali Goenka: Our utilization annually is going to be 80% across all the categories. Let me just be very clear on that, whether it's our travels, whether it's sheets or rugs. This is just a staggered kind of a lag that you can see where you are seeing this utilization. But as we go forward, it is definitely going to be 80% across everything.

Speaker #3: This is just a staggered kind of lag that you can see, where you are seeing this utilization. But as we go forward, it is definitely going to be 80% across everything.

Speaker #1: Oh, that's—that's a very strong number. If the bed linen crosses 90% utilization... Again, a second question is on—

Bhavin Chheda: Okay. That's a very strong number if the bed linen crosses 90% utilization. Okay. My second question is on-

Speaker #3: That is 80%. I mean, I said 80% across all the categories.

Dipali Goenka: I said 80%, Bhavin. I said 80% across all the categories.

Speaker #1: Yeah, but for the full year, it's 80%. Which means in the coming quarters, the bed linen should be crossing 90%, right?

Bhavin Chheda: Yeah, but for the full year, 80%, which means the coming quarters, the bed linen should be crossing 90%, right?

Speaker #3: Yeah. It will depend on quarter two, quarter three, quarter four. But the average we are talking about an 80, 85 percent, yes.

Dipali Goenka: Well, it will depend on Q2, Q3, Q4, but the average we are talking about an 80%, 85%. Yes.

Speaker #1: Sure. My second question is on Advanced Textile and domestic retail business. How are they doing? And is domestic retail now EBITDA positive?

Bhavin Chheda: Sure. My second question is on Advanced Textiles and domestic retail business, how they are doing, and is domestic retail now EBITDA positive?

Speaker #3: So domestic retail this time actually has worked pretty well. And we are actually seeing a double digit growth around 20%. And we are on near about break even.

Dipali Goenka: Domestic retail this time actually has worked pretty well, and we are actually seeing a double-digit growth around 20%, and we are now near about breakeven. This will be something where as we grow this business, we are on the target to achieve INR 1,000 crores. We see both our businesses, Welspun and SPACES. Both have continued to show a great growth across the country.

Speaker #3: And this will be something, you know, where, as we grow this business, we are on target to achieve ₹1,000 crore.

Speaker #3: And, you know, we we we see both our both our businesses Westman and Spaces you know, both have continued to show a great, great growth across the country.

Speaker #1: Sure. Third question. Yeah.

Bhavin Chheda: Sure. Third question.

Speaker #3: Yeah. Go ahead.

Dipali Goenka: Yeah, go ahead.

Speaker #1: On the flooring business, we saw, for the first time, double-digit margins of 10%. So, are those margins sustainable, or was there a one-off in that margin?

Bhavin Chheda: On the Flooring business, we saw first-time double-digit margins of 10%. Are that margins sustainable, or was there a one-off in that gross margin?

Speaker #3: No, this is going to be sustainable. As I mentioned earlier as well, there is a lot of work that is being done in the qualitative business that we are taking.

Dipali Goenka: No, this is going to be sustainable. As I spoke earlier as well, there is a lot of work that is done in the qualitative business that we are taking in terms of soft Flooring. There is also the geographic diversification that we are working on in terms of different countries like Australia and New Zealand. A lot of cost controls have been also taken on here. Hence, you are seeing this number and which we will continue to maintain. We are very, very comfortable with it now at the moment.

Speaker #3: In terms of stock flooring, there's also the geographic diversification that we're working on, in terms of different countries like Australia and New Zealand.

Speaker #3: And a lot of cost control has also been implemented here. And, you know, hence you are seeing this number, which we will continue to maintain.

Speaker #3: We are very, very comfortable with it now, at the moment.

Speaker #1: Great. Thank you, and best of luck, yeah.

Bhavin Chheda: Great. Thank you and best of luck.

Speaker #3: Thank you.

Dipali Goenka: Thank you.

Speaker #2: Thank you. Before we move to the next question, a reminder to the participants to ask a question. You may press star and one. The next question is from the line of Deepali Kumari.

Operator 2: Thank you. Before we move to the next question, a reminder to the participants to ask a question, you may press star and 1. Next question is from the line of Deepali Kumari from Aryan Capital Markets Limited. Please go ahead.

Speaker #2: From Ariane Capital Markets Limited. Please go ahead.

Deepali Kumari: Thank you for the opportunity. I have a couple of questions. Your EBITDA margin stood at 12.5%, given your normalized target of 15%. What are the key levers required to bridge this, to reduce this gap? Is it purely operating levers or further mix optimization? Does this guidance factor in potential slight cost spike due to ongoing West-Asia conflict?

Speaker #4: Thank you for the opportunity. I have a couple of questions. Your own EBITDA margin is reported at 12.5%, given your normalized target of 15%. What are the key levers required to bridge this 50 bps gap?

Speaker #4: Is it purely operating leverage or further mixed optimization? And does this rising factor in potential site cost spike due to ongoing Westman West Asia conflict?

Speaker #3: So, you know, I earlier spoke about it, Deepali. I spoke about, you know, it is going to be a mix of the volume recovery that we've had, the tariff share unwinding, you know, that is converting into the operating leverage.

Dipali Goenka: I earlier spoke about it, Deepali. I spoke about it is going to be a mix of the volume recovery that we have had, the tariff share unwinding that is converting into the operating leverage on a largely fixed cost base. Fundamentally, business is also improving. The mix is also improving. The quality of business is getting better. Of course, it is also about the cost discipline. When you talk about the numbers, your question of 15%, it is going to be a gradual process towards 15%, which we have spoken about. So right at 12.5%, as we go forward in the next one year, we will see that moving towards 15%.

Speaker #3: On a largely fixed cost base. So fundamentally, business is also improving. The mix is also improving. The quality of business is getting better. And of course, it's also about the cost discipline.

Speaker #3: And when you talk about the numbers to a question of, you know, 15%, it is going to be a gradual process towards 15%, which we have spoken about.

Speaker #3: So right now it's 12.5. And as we grow forward, in the next one year, we will see that moving towards 15%.

Speaker #4: Okay, and with the medium-term aspiration to move your non-US revenue mix from 41% to 50%, which specific geographic regions are you expecting to contribute to this?

Deepali Kumari: Okay. With the medium-term aspiration to make your non-rev revenue mix from 41% to 50%, what specific geographic region are you expecting to contribute to for this mix?

Speaker #3: See, let me just give you a perspective. And I think I've earlier also told you that United States is still the biggest that is there.

Dipali Goenka: See, let me just give you a perspective. I think I have earlier also told you that United States is still the biggest that is there. The UK home market is around USD 5 to USD 7 billion. Pakistan is around 50%, and this is the market share we will definitely take. This stands for us to gain, and we will continue to grow this. We are in conversation with a lot of retailers here. Europe, again, is also right around the corner. Our conversations with the retailers have already begun, and we already are working. We are in the working relationship with these retailers as well. As we continue to grow, America will be around 50%, 51%, mostly or 55%, and the rest of the world, which will be UK, Europe, Japan, and the others, will contribute to this portion, including India as well.

Speaker #3: UK is, you know, the UK home market is around 5 to 7 billion dollars. Where Pakistan is around 50%. And this is the market share we will definitely take.

Speaker #3: You know, this is this stands for us to gain. And we will continue to grow this. We already are in conversation with a lot of retailers here.

Speaker #3: Europe again, as is also right around the corner. Conversations with the retailers have already begun, and we already are working—we are in a working relationship with these retailers as well.

Speaker #3: So as we continue to grow, you know, America will be around 50–51 percent, mostly, or 55 percent, and the rest of the world—which will be the UK, Europe, Japan, and the others—will contribute to this portion, including India as well.

Speaker #4: Okay, one more question. Regarding global B2B business, are they, are they as strong or stronger than our global branded business? So, are we prioritizing private label partnerships over our own branded portfolio in the current environment?

Deepali Kumari: Okay. From the perspective like global B2B business, this quarter grew more than your global branded business. Are we prioritizing private label partnerships over our own branded portfolio in the current environment?

Speaker #3: It's always been our, you know, B2B business. And if you look at it—if you have seen it—our branded business is around 18%.

Dipali Goenka: It has always been our B2B business. If you look at it, if you have seen it, our branded business is around 18%, but our B2B business will be the strong one, which is actually the anchor of all the businesses, you know. That is what is going to continue to grow far more strongly. Our brands will also. We already are looking at USD 100 million in the terms of our global brands as well. That is also holding on very, very strong with us. That has also seen a year-on-year growth of 27%. I somehow say that we have done pretty well here, actually.

Speaker #3: But our B2B business will be the strong one, which is actually the anchor of all the businesses. You know? And that is what is going to continue to grow far more, you know, strongly.

Speaker #3: Our brands will also, like we already are looking at 100 million dollars in the terms of our global brands as well. So that is also holding on very, very strong with us.

Speaker #3: So, I mean, that has also seen a year-on-year growth of 27%. So I would say that we've done pretty well here, actually.

Deepali Kumari: Okay. Ma'am, on the tariff side, currently, how is absorbing the cost? If you can give the split between Welspun and the retailers and the end consumer.

Speaker #4: Okay. And on the tariff side, like, currently, who is absorbing the cost? Like, if you can give the split between Welspun and the retailers and the end consumer.

Speaker #3: So this is money share.

Manish Sansan: This is Manish here. Thanks for this question. It has always been a mix of things. It has never been straightforward. Sometime it is customer, sometimes consumer, sometimes we are bearing. It is always based on case to case, customer to customer, and program to program. But that is already baked in all this cost into this margins, what we are seeing. Now it is part of our life. We were at 50%, we have come out from that. Now we can see it much better anyway, going further.

Speaker #5: Thanks for this question. So, it has always been a mix of things. It has never been straightforward. Sometimes it is customer, sometimes consumer, sometimes we are bearing.

Speaker #5: So it is always based on case to case customers to customer and program to program. So but that is already back then all this cost into this margins, what we are seeing.

Speaker #5: So now it is part of our life. We were at 50%. We have come out from that. So now we can see it much better, anyway, going forward.

Speaker #3: So so as you said, as Manish said, it's going to be a mix of all the three. Because anyway, we partnered with our retailers.

Dipali Goenka: As Manish said, it is going to be a mix of all the three, because anyway, we partnered with the retailers, and the retailers passed on the price increase to the consumer. That is the way it was. Now we are behind that. That is all behind us, and it is now our 10%, and we are pretty good there.

Speaker #3: And the retailers passed on the price increase to the consumer, and that's the way it was. And now we are behind that.

Speaker #3: That's all behind us, and it's now our 10%. And we are pretty good there.

Speaker #4: Okay. And also, you wanted to be a leader in the sleep ecosystem. So does this enforce the product category expansion beyond sales and PS pillow?

Deepali Kumari: Okay. Ma'am, also I wanted to hear a little bit on the sleep eco-system. Does this involve the product category expansion beyond sheets and pillows, like smart bedding and mattresses?

Speaker #4: Like, smart wedding and mattresses?

Speaker #3: Mattresses is not something that we are talking about. We we speak about pillows here. And we we will continue and as I spoke and I I said that, you know, we are on track.

Dipali Goenka: Mattresses is not something that we are talking about. We speak about pillows here, and we will continue. As I said, that we are on track, and we are on track to achieve around USD 60 million in this year. As you know, Nevada has also commenced operation. Ohio is already at 80% utilization.

Speaker #3: And we are on track to achieve around 60 million dollars in in this year, in a pillow. As you know, Nevada has also commenced operations.

Speaker #3: Ohio is already at 80% utilization.

Speaker #4: Okay. Thank you so much. All the best.

Deepali Kumari: Okay. Thank you so much. All the best.

Speaker #3: Thank you.

Dipali Goenka: Thank you.

Speaker #1: Thank you. Next question is from the line of Ronak Shah from Equitas Securities. Please go ahead.

Operator 2: Thank you. Next question is from the line of Ronak Shah from Equirus Securities. Please go ahead.

Speaker #2: Thanks for the opportunity and congratulations on a good set of numbers. My first question is on the USA retail front. So how the management is seeing the traction over there?

Ronak Shah: Thanks for the opportunity, and congratulations on a good set of numbers. My first question is on the USA retail front. How the management is seeing the traction over there, how the overall demand shaping up in terms of order book and near to mid-term visibility you are gauging, though you are highlighting a double-digit top-line growth, but just from the retailer demand and the secondary kind of thing.

Speaker #2: How the overall demand shaping of in terms of order book and near to midterm visibility you are gauging? Though you are highlighting a double digit top line growth, but just from the retailer demand and the secondary kind of thing.

Speaker #3: So I can tell you that, you know, consumer spending across the, you know, all all the segments is really very, very healthy. The retail sales actually grew 5.2% year on year in May.

Dipali Goenka: Well, I can tell you that consumer spending across all the segments is really very, very healthy. The retail sales actually grew 5.2% year-on-year in May. Also, if you look at the recent consumer data, it looks pretty healthy. If I can say across Father's Day, Mother's Day, and the other occasions like back to college seasons were very, very healthy. The footfalls have increased across the key retailers. Hence, if you look at it, the demand, America all said and done, and Fed has actually held on their Fed rates as well. Overall, America is really very resilient in the terms of what they are doing, and the growth is looking very, very healthy. The momentum is there of consumption as well.

Speaker #3: And also, if you look at the recent consumer data, it looks pretty, pretty healthy. I mean, your I mean, if I can say across Father's Day, Mother's Day, and the other occasions like back to college season, were very, very healthy.

Speaker #3: The footballs have increased across the key retailers. So hence, you know, like if you look at it, the demands America all said and done.

Speaker #3: And Fed has actually held on, held on their Fed rates as well. So overall, America is really very resilient in terms of what they are doing.

Speaker #3: And the growth is looking very, very healthy. The momentum is there in consumption as well.

Speaker #2: Understood. Second on the trade front, sorry, tariff front. So when we are seeing a 10% overall tariff right now, and things are uncertain, but by what level of tariff the company is quite confident to see a balance sort of performance?

Ronak Shah: Understood. Second, on the rate front. Sorry, tariff front. When we are seeing a 10% overall tariff right now and things are uncertain. But by what level of tariff the company is quite confident to see a balanced sort of performance? Because one of the player into the textile space has highlighted that up to 18% to 20%, they are quite confident to manage the overall performance and the margin.

Speaker #2: Because one of the player into the textile space has highlighted that up to 18 to 20%, they are quite confident to manage the overall performance and the margin.

Speaker #3: See, it is a matter of what's, you know, the other countries get in in in, you know, in the terms of their tariff rates.

Dipali Goenka: See, it is a matter of what the other countries get in the terms of their tariff rates. Somewhere we have learnt that it is always a partnership and a collaboration with our retail partners. Wherever, when the tariff was even 25% to 50% and to where we are, as we go forward with the BTA that kicks in, we will work with our customers, and we will take it from there. It is always going to be not a one-sided approach. It is always a collaborative approach. Already, the tariff impact has already been passed on to the consumers, which hasn't been retracted in United States of America.

Speaker #3: And somewhere we have learned that it is always a partnership and a collaboration with our retailer retail partners. So wherever when the tariff was even 25% to 50% and to where we are, and as we go forward with the BTA, that kicks in, we will work with our with our customers.

Speaker #3: And we will we will take it from there. So it is always going to be not a one-sided approach. It is always a collaborative approach.

Speaker #3: And already, the tariff impact has already been passed on to the consumers, which hasn't been retracted in the United States of America.

Speaker #2: Understood. On the margin front, ma'am, can you highlight that on a FY27 whole base, when we are expecting a mid-teen side of the margin, though in the near term, considering the current RM inflation plus certain OPEX headwinds, how the near-term margin, specifically from the second quarter perspective, will look like?

Ronak Shah: Understood. On the margin front, ma'am, can you highlight that on FY27 whole days when we are expecting to maintain side of the margin. In near term, considering the current RM inflation plus certain OpEx headwinds, how the near term margins, specifically from the Q2 perspective, will look like?

Speaker #3: We will continue to maintain these numbers. And we will we'll work through them. And we will we will maintain our numbers that we have committed on the low teams.

Dipali Goenka: We will continue to maintain these numbers. We will work through them, and we will maintain our numbers that we have committed on the low teens.

Speaker #2: Fair, fair point. Fair point. And lastly, ma'am, on the overall profitability, so when we see that the non-USA share is gaining the traction, but structurally these mar these geographies are relatively lower margin.

Ronak Shah: Fair point. Lastly, ma'am, on the overall profitability. When we see that the non-USA share is gaining the traction, but structurally, these geographies are relatively lower margin. What are the key levers which management is emphasizing or putting in to sustain the profitability? Just a qualitative aspect.

Speaker #2: So, what are the key levers that management is emphasizing or putting in place to sustain profitability? Just qualitatively speaking?

Speaker #3: Let me just tell you, with wealth funds, we actually work in the mid to better to best categories. So definitely, you know, we will maintain the margins here too.

Dipali Goenka: Let me just tell you with Welspun, we actually work in the mid to better to best categories. Definitely, we will maintain the margins here too. We are not going to compromise on the margins at all. We don't work in the opening price points. Here as well, the impact is on the opening price points. Wherever that is needed, we are working on a better to best and hence, as we go forward, our margins will be pretty okay.

Speaker #3: So we are not going to compromise on our margins at all. We don't work in the opening price points. So here as well, you know, the impact is on the opening price points.

Speaker #3: So, wherever that is needed, we are working on a better-to-best approach. And hence, as we go forward, our margins will be pretty okay.

Speaker #2: Loud and clear, ma'am. That's it from my side. Thank you.

Ronak Shah: Loud and clear, ma'am. That's it from my side. Thank you.

Speaker #3: Thank you.

Dipali Goenka: Thank you.

Speaker #1: Thank you. Before we move to the next question, a reminder to the participants: to ask a question, you may press R and 1. The next follow-up question is from the line of Soham Samantha.

Operator 2: Thank you. Before we move to the next question, a reminder to the participants to ask a question, you may press star then one. Next follow-up question is from the line of Soham Samanta from Motilal Oswal. Please go ahead.

Speaker #1: From Motilal Oswald. Please go ahead.

Soham Samanta: Thank you, ma'am, for the opportunity to follow up. I just wanted to check, how do you look at Flooring business for the full year? I mean, for FY27, how do you look at this business?

Speaker #2: Thank you, ma'am, for the opportunity to follow up. Just wanted to check, how do you look for floating business for the full year? I mean, for FY27, how do you look this business?

Speaker #3: So, the floating business will continue to, you know, focus on soft flooring, and we will continue to look at the growth here.

Dipali Goenka: The Flooring business will continue to look at the focus on soft Flooring, and we will continue to look at the growth here in terms of different categories. We have different countries here. India, again, is a very good commercial space that is growing and there is a lot of investments that are happening in this space. We will see India in terms of wall-to-wall carpet tiles will grow. Globally, in the countries like UK, as we already spoke about UK and Europe FTA. There is an opportunity in terms of soft Flooring there as well, also including area rugs. Then again, the important aspect is the geographic diversification in Australia, New Zealand, Canada, and the GCC. There is going to be a continuous focus there. We are working on qualitative products and hence our margins will not get diluted.

Speaker #3: In terms of different categories, we have different countries here. India, again, is a very good commercial space that is growing, and there's a lot of investment happening in this space.

Speaker #3: So we will see India in the terms of wall to wall carpet tiles will grow. Globally, you know, in the countries like, you know, UK now, as we we already spoke about UK and Europe FTA.

Speaker #3: So there's an opportunity in the terms of soft flooring there as well. Also, including area rugs. And there's again, the important aspect is the geographic diversification in Australia and New Zealand, Canada, and the GCC.

Speaker #3: So, there is going to be a continuous focus there. So we are working on qualitative products and, you know, hence, our margins will not get diluted.

Speaker #2: Okay. Just wanted to check one thing that is there any spillover from last quarter to this quarter numbered in top line?

Soham Samanta: Okay. I just wanted to check one thing, that is there any spillover from last quarter to this quarter numbered in top line?

Speaker #3: No. Not at all.

Dipali Goenka: No, not at all.

Speaker #2: Okay. Okay. And Manish, one capex point, just wanted to check, what is our capex for this year and next year? And if you can spell out what kind of capex we are doing and where we are basically investing.

Soham Samanta: Okay. Manish had one CapEx point. Just wanted to check what is our CapEx for this year and next year, if you can spill out what kind of CapEx you are doing and where we are basically investing.

Speaker #4: So as we always say that, you know, this year we are targeting roughly around 400 to 500 crore. And that is mainly for our automation, modernization, or de-bottlenecking.

Manish Sansan: Well, as we always say that this year we are targeting roughly around INR 400 to 500 crore, and that is mainly for our automation, modernization, or debottlenecking. Next year, it is too early to project now because there are a lot of things going on. Maybe closer to end of this financial year, we will come back for next year's guidelines.

Speaker #4: Next year, it is too early to project now because there are a lot of things going on. So maybe closer to the end of this financial year, we will come back with next year's guidelines.

Speaker #2: Got it. Thank you. Thank you very much and all the best.

Soham Samanta: Got it. Thank you. Thank you very much and all the best.

Speaker #4: Thank you.

Manish Sansan: Thank you.

Speaker #1: Thank you. Next question is from the line of Aradhana Jain. From 361 Capital Market. Please go ahead.

Operator 2: Thank you. Next question is from the line of Aradhana Jain from 361 Capital Markets. Please go ahead.

Speaker #5: Congratulations on the good set of numbers. Couple of macro-related questions. First, we've already spoken a lot on the US side, but just to understand the now that India's tariff position is in US has normalized, have have we really seen any tangible change in the sourcing allocation in the first quarter from customers, either higher wallet share for India or consolidation towards the larger integrated vendors like you?

Aradhana Jain: Congratulations on the good set of numbers. Couple of macro-related questions. First, we have already spoken a lot on the US side, but just to understand, now that India's tariff position in US has normalized, have we really seen any tangible change in the sourcing allocation in the first quarter from customers, either higher wallet share for India or consolidation towards the larger integrated vendors like you? Are we seeing any incremental order wins or has the revenue essentially come from our existing customers in Q1?

Speaker #5: And are we seeing any incremental order wins? Or has the revenue essentially come from our existing customers in one queue?

Speaker #3: So let me just tell you that India definitely is in a good position. And kind of America actually needs huge capacities. And the opportunity for India stands very, very strong here.

Dipali Goenka: Well, let me just tell you that India definitely is in a good position. America actually needs huge capacities. The opportunity for India stands very, very strong here, because there is nobody else in our neighbors who have that kind of a capacity, and hence, focus and presences towards India. As I earlier said that the markets in terms of consumption is looking better. Of course, there is that incremental businesses that are coming our way, and that will continue to do so as the demand looks very, very robust. India is in a strong position. The demand looks robust, and so for Welspun as well. We are at a good position at the moment.

Speaker #3: Because there's nobody else in our neighbors who have that kind of a capacity. And and hence, focus and, you know, preferences towards India. As I earlier said, that the markets in the terms of consumption is looking better.

Speaker #3: So of course, there is that incremental businesses that are coming our way. And that will continue to do so as, you know, the demand looks very, very robust.

Speaker #3: So, India is in a strong position. The demand looks robust, and so for Wealth Fund as well. We are in a good position at the moment.

Speaker #5: And during the last one year, had we lost any market share because of the tariff issues? Or we didn't lose any market share of any of our customers?

Aradhana Jain: During the last one year, had we lost any market share because of the tariff issues, or we didn't lose any market shares of any of our customers?

Speaker #3: So you know, you know, Aradhana for us here, we have these long-term strategic partnerships with all the retailers. And these partnerships as you know, in America, most of the businesses are replenishment businesses.

Dipali Goenka: Aradhana, for us here, we have these long-term strategic partnerships with all the retailers. These partnerships, as you know, in America, most of the businesses are replenishment businesses. Hence, we continue to work towards that. We actually work together in the tough times in tariff as well together. We collaborated together. The demands were low, we continue to still work with them. Hence, there's nothing that has been lost at all.

Speaker #3: And hence, we we continue to work towards that. We actually work together in the tough times in tariff as well together. We collaborated together.

Speaker #3: The demands were low. We continue to still work with them. So hence, there's nothing that has been lost. At all.

Speaker #5: Understood. Secondly, just wanted your thoughts on Rostel. Rostel is up for, you know, termination by September. So any thoughts on whether government is looking at, you know, extending it further or how is government thinking of, you know, dealing with it?

Aradhana Jain: Understood. Secondly, just wanted your thoughts on RoSCTL. RoSCTL is up for termination by September. Any thoughts on whether government is looking at extending it further or how is government thinking of dealing with it? Because if RoSCTL gets eliminated, then for us the export incentive as a percentage of our EBITDA is quite decent. How are we looking at it and what are your thoughts on that?

Speaker #5: Because if RoSCTL gets eliminated, then for us, the export incentive as a percentage of our EBITDA is quite decent. So, how are we looking at it?

Speaker #5: And what are your thoughts on that?

Speaker #3: I'll just tell you that we will wait till this happens, and we hope for the best. And I can tell you that we will, we will—I think we will have only good news, hopefully.

Dipali Goenka: I'll just tell you that we will wait till this happens, and we hope for the best. I can tell you that I think we will have good news over here, hopefully. That's what we'll pray for.

Speaker #3: That's what we pray for.

Speaker #5: Understood. Thank you. And all the best.

Aradhana Jain: Understood. Thank you, and all the best.

Speaker #1: Thank you. Next follow-up question is from the line of Prerna Janjanwala from Elara Securities. Please go ahead.

Operator 2: Thank you. Next follow-up question is from the line of Prerna Jhunjhunwala from Elara Securities. Please go ahead.

Speaker #3: Thank you for the opportunity. I just wanted a follow-up on the capex plan. The with the de-bottlenecking, what kind of capacity increase that we can see?

Prerna Jhunjhunwala: Thank you for the opportunity. I just wanted a follow-up on the CapEx plan. With the debottlenecking, what kind of capacity increase that we can see, and when will it commission?

Speaker #3: And when will it commission? So here, the the de-bottlenecking of around 120 crores that we're seeing will be in the terms of a processing and in the terms of, you know, volume.

Dipali Goenka: Here, the debottlenecking of around INR 120 crores that we are seeing will be in the terms of a processing and in the terms of volume, we see a kind of a build-up around 10 to 20 tons per month, and that will be a big number. Because I think, everywhere, as we look at it, the dyed category or in a processing category, we tend to get sometimes choked. That will debottleneck that.

Speaker #3: We'll see kind of a growth of around 10 to 20 tons per month, and that will be a big number. And because I think, you know, everywhere as we look at it, in the dyed category or in the processing category, we tend to get, you know, sometimes choked.

Speaker #3: So that will de-bottleneck that.

Speaker #5: Okay.

Prerna Jhunjhunwala: Okay.

Speaker #3: And Prerna, let me tell you, we already are also looking at around 400 to 500 crores in the capex. That will all be invested in all these kind of investments, which will actually help us to de-bottleneck and, you know, increase our numbers.

Dipali Goenka: Prerna, let me tell you, we already are also looking at around INR 400 to INR 500 crores in the CapEx. That will all be invested in all these kind of investments, which will actually help us to debottleneck and increase our numbers.

Speaker #5: Okay. Are you also planning to...

Prerna Jhunjhunwala: Okay. Are you also planning to expand capacity in the bath category since you are already at 80% and we have a large market opening up in Europe, so will we be capacity-constrained in a year or 2?

Speaker #3: Expand capacity in the bath category since you're already at 80%? And we have a large market opening up in Europe, so will we be capacity-constrained in a year or two?

Speaker #3: So Prerna, one thing is wealth fund has a global position of leadership in Towels. And we will continue to maintain that. And we are not going to hesitate in investing.

Dipali Goenka: So, Prerna, one thing is Welspun has a global position of leadership in towels, and we will continue to maintain that, and we are not going to hesitate in investing. So when the time comes in, that kind of an opportunity also, we will be taking. And the prudence will be on the ROIC that we will maintain. So yes, the investments will be happening if that opportunity is, which we will be exploring as well. We are not going to let any opportunity pass us here.

Speaker #3: So when the time comes in, that kind of a, you know, opportunity also we we will be taking. And the prudence will be on the ROC that we will maintain.

Speaker #3: So yes, the investments will be happening if that opportunity is there, which you will be exploring as well. We are not going to let any opportunity pass us here.

Speaker #5: Understood. The last question is on input cost inflation. I know you've been working on cost management and related matters, but the increase in cotton prices has been sharp over the last few months.

Prerna Jhunjhunwala: Understood. The last question on input cost inflation. I know you have been working on cost management and stuff, but cotton price increase has been sharp in the last few months. Even the crude oil derivatives have moved up quite significantly. So, are the customers actually compensating you for increment in the cost inflation? And have you started seeing new orders at newer prices, or how are the negotiations happening? Also, US tariffs. Last year, we bore a good part of the cost there as well. So what are the thoughts of retailers on how to compensate on that front as well to the suppliers?

Speaker #5: Even the crude oil derivatives have moved up quite significantly. So are the customers actually compensating you for increment in the cost inflation? And have they have you started seeing new orders at newer prices?

Speaker #5: Or how are the negotiations happening? Also, US tariffs last year we borne a lot of a big part of a good part of it of the cost there as well.

Speaker #5: So what are the thoughts for of retailers on how to compensate on that front as well? With the suppliers.

Speaker #3: Prerna, this time it has been very, very clear in terms of the costs—the raw material costs. It is going to be, you know, passed on to the customers.

Dipali Goenka: Prerna, this time it has been very, very clear in the terms of the raw material cost. It is going to be passed on to the customers. It is very, very clear. This is something that we have already done, and we are in the conversation as well. As you always know, when these raw material cost indexes go up, which is going up in the terms of the macros as well, we are talking to our customers, and we are working through the prices as well. It is very clear because we will not be able to bear those costs. When you talked about the tariffs, this was done in the terms of through collaboration with our customers, where we both partner together to face the tariff onslaught.

Speaker #3: It is very, very clear. This this is something that we have already done. And we are in the conversation as well. And as you always know, that when the raw material costs indexes go up and which is going up in the terms of the macros as well, so we are talking to our customers.

Speaker #3: And we are working through the prices as well. It's very clear because we will not be able to bear those costs. When you talked about the tariffs, this was done in terms of collaboration with our customers.

Speaker #3: Where they we both partnered together to face the tariff onslaught.

Speaker #5: Okay. So we should not expect any major reversal of that cost that you've borne in future is what I was trying to understand. So that is.

Prerna Jhunjhunwala: Okay. We should not expect any major reversal of that cost that you have borne in future, is what I was trying to understand. That is-

Dipali Goenka: Yes. Yes, Prerna. Yes.

Speaker #3: Yes. Yes, Prerna. Yes, Prerna. Yes.

Speaker #5: Okay. Understood, ma'am. Thank you.

Prerna Jhunjhunwala: Okay. Understood, ma'am. Thank you.

Speaker #3: Thank you.

Dipali Goenka: Thank you.

Speaker #1: Thank you. Next question is from the line of Ronak Shah from Equitas Securities. Please go ahead.

Operator 2: Thank you. Next question is from the line of Ronak Shah from Equirus Securities. Please go ahead.

Speaker #4: And for the follow-up—so, ma'am, just on the incentive front, in our base case assumption of 10% kind of the EBITDA margin, are we factoring a steady state incentive structure?

Ronak Shah: Thanks for the follow-up. So ma'am, just on the incentive front, into our base case assumption of team kind of the EBITDA margin, are we factoring a steady state incentive structure or are we expecting some lapse on that? Secondly, pass-through. So certain players are highlighting that for them, the incentive is partly pass-through, and going forward, they are likely to pass on to the end consumer as well in case of any negative outcome. So how you see whole structure in this front?

Speaker #4: Or are we expecting some lapse on that? And secondly, pass-through—certain players are highlighting that for them, the incentive is partly pass-through. And going forward, they are likely to pass it on to the end consumer as well in case of any negative outcome.

Speaker #4: So how you see whole structure in this front?

Speaker #3: This will actually be very obvious if that's a thing we'll not be able to bear any brunt. So it is going to be the same landscape that will apply to all the retailers the way the entire position comes through.

Dipali Goenka: This will actually be very obvious. If that's the thing, we will not be able to bear any brunt. So it is going to be the same landscape that will apply to all the retailers the way the entire position comes through. So if there's anything that happens, it's going to be borne by everybody across. So, that's the way we are looking at the incentive.

Speaker #3: So if there's anything that happens, it's going to be borne by everybody across. So that's the way we we are looking at the incentives.

Speaker #4: Okay. And in the base case assumption, we are expecting a likely continuation or a positive outcome only.

Ronak Shah: Okay. In base case assumption, we are expecting a likely continuation or a positive outcome only.

Dipali Goenka: Yes, mostly, yes.

Speaker #3: Yes, mostly. Yes.

Speaker #4: Understood. Understood. That's it from my side. Thank you, ma'am.

Ronak Shah: Understood. That is it from my side. Thank you, ma'am.

Speaker #3: Thank you.

Dipali Goenka: Thank you.

Speaker #1: Thank you. Ladies and gentlemen, to ask a question, you may press star one. As there are no further questions from the participants, I now hand the conference over to the management for closing comments.

Operator 2: Thank you. Ladies and gentlemen, to ask a question, you may press star and one. As there are no further questions from the participants, I now hand the conference over to the management for the closing comments.

Speaker #3: Thank you, everyone, for joining us today, and for your thoughtful questions and continued engagement. As we conclude, I would like to leave you with one key message.

Dipali Goenka: Thank you everyone for joining us today and for your thoughtful questions and continued engagement. As we conclude, I would leave you with one key message. Welspun Living today is a fundamentally stronger company. We have built a more resilient business with stronger customer partnerships, differentiated capabilities, a healthy balance sheet, and multiple engines of growth. As the external environment continues to evolve favorably, we are well-positioned to capture the opportunities ahead and deliver sustainable profitable growth. We are encouraged by the strong start to FY27 and believe the quarter reinforces the direction in which the business is headed. Our commitment remains unchanged to grow responsibly, innovate continuously, and create sustainable long-term value for all our stakeholders. Thank you once again for your continued trust and confidence in Welspun Living. We look forward to speaking with you again next quarter.

Speaker #3: Welspun Living today is a fundamentally stronger company. We have built a more resilient business with stronger customer partnerships, differentiated capabilities, a healthy balance sheet, and multiple engines of growth.

Speaker #3: As the external environment continues to evolve favorably, we are well-positioned to capture the opportunity ahead and deliver sustainable, profitable growth. We are encouraged by the strong start to FY27 and believe the quarter reinforces the direction in which the business is headed.

Speaker #3: Our commitment remains unchanged: to grow responsibly, innovate continuously, and create sustainable long-term value for all our stakeholders. Thank you once again for your continued trust and confidence in Welspun Living.

Speaker #3: We look forward to speaking with you again next quarter. Should you have any further queries, please feel free to connect with our investor relations team.

Dipali Goenka: Should you have any future further queries, please feel free to connect with our investor relations team. Thank you.

Speaker #3: Thank you.

Speaker #1: Thank you, ma'am. On behalf of 361 Capital Markets, that concludes this conference. Thank you all for joining us. And you may now disconnect your lines.

Operator 2: Thank you, ma'am. On behalf of 360 ONE Capital Markets, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.

Browse all earnings call transcripts