Welspun Living Ltd (WELSPUNLIV) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator (360 ONE Capital Market): Ladies and gentlemen, good day, and welcome to Welspun Living Q2 FY '27 earnings conference call hosted by 360 ONE 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.
Moderator (360 ONE Capital Market): Should you need assistance during this conference, please signal an operator by pressing "*" then "0" on your touchtone 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.
Aradhana Jain (360 ONE Capital Market): Thank you, Dorwin. Good evening, everyone. On behalf of 361 Capital Market, I welcome all participants and the management of Welspun Living to the 2Q FY '27 conference call. Without much ado, I'll hand over the call to Ms. Bharti Agarwal, Head Investor Relations, Welspun Living to introduce the management. Over to you Bharti.
Bharti Agarwal (Welspun Living Ltd): Thank you, Aradhna, and good evening, everyone. On behalf of Welspun Living Limited, I would like to welcome you all to second quarter FY 2027 earnings conference call. On this forum today, we have with us, Ms. Dipali Goenka - Managing Director and CEO, Mr. Manish Bansal - Chief Financial Officer, and Mr. Harsh Rungta - Group Head Investor Relations, Welspun World. 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'll begin with the opening remarks from the management, following which we'll open the floor for a Q&A session. Should you have any additional questions after the call, please feel feel free to reach out to us. With that, I would now like to hand it over to the call to Ms. Dipali Goenka. Over to you, ma'am.
Dipali Goenka (Welspun Living Ltd): Thank you, Bharti. Good evening everyone, and thank you for joining us for Welspun Living's quarter 2 FY '27 earnings call. We entered FY '27 with strong momentum and have carried this into the second quarter. Consolidated revenue grew 16.9% year-on-year to 2,870 crores with EBITDA margins at 12.9% expanded 600 bps year-on-year. It is particularly encouraging to see the progress beyond the headline numbers: growth across our business, improving operating performance, stronger cash conversion, and importantly, a balance sheet that has moved into net cash. These results reflect impacts of the floods at our Vapi facility, where operations were disrupted for several weeks during the quarter. The plant has since resumed partial operations, and we are working towards restoring full capacity. I would like to thank our teams for their efforts and commitment in managing this disruption. Our core home textiles continued to be a key growth driver, with exports growing 18.3% year-on-year. Our customer relationships, product innovation, and ability to respond to evolving retail trends continued to underpin our performance. This growth was also supported by healthy retailers' demand ahead of the holy holiday season. Our US onshore pillow business grew 2.4x year-on-year this quarter. With both Ohio and Nevada facilities operational, we are closer to the customer and more agile in our supply chain. We remain on track to double the business this year, further strengthening our position in the sleep category. Our domestic business grew 28.2% year-on-year on the back of strong B2C performance across general trade, e-commerce, and quick commerce. We see significant potential in the gifting and festive opportunities, leveraging improved visibility and product range. We will continue to scale this business through stronger brand, wider distribution, and products aligned with evolving consumer preferences. Flooring business continued its recovery with revenue growing 19.3% year-on-year, with EBITDA margins reaching 10.8%, improving both sequentially and year-on-year. The progress reflects the benefits of the strategic actions taken to sharpening the portfolio and prioritizing profitable growth.
Dipali Goenka (Welspun Living Ltd): has been supported by a material improvement in our cash conversion cycle and ROCE moving into the low teens. Together, these milestones reflect our focus on profitable growth, capital efficiency and sustainable value creation. The global environment remains dynamic with commodity cost pressures persisting across the value chain, including firm cotton prices, an uptick in man in man-made fiber costs, higher oil linked inputs and elevated freight rates, amid ongoing tensions in the Middle East. We are actively managing these pressures through disciplined procurement, planning, customer price pricing discussions and continued productivity improvements. On the demand side, consumers remain value-conscious, but quality, comfort and design remain important purchase considerations. At the same time, global retailers are prioritizing dependable supply chains, sourcing diversification and integrated manufacturing partners that can deliver scale, innovation and speed to market. This creates an opportunity for Indian manufacturers to compete on capabilities and reliability alongside cost competitiveness. With India's expanding trade access, we believe, Welspun is well positioned to capture a large share of this opportunity. Our strategy is to translate these structural shifts into profitable growth by strengthening customer partnerships, investing in differentiated products and building capabilities to improve competitive advantage. We are also strengthening the long-term competitiveness of our operations through sustainability initiatives. Anjar is now powered by 100% green electricity, while our Step Zero program is advancing the transition towards more sustainable supply chains. These initiatives support our environmental commitments, while strengthening our position with global customers, who increasingly value responsible and resilient sourcing. Looking ahead, our priorities are clear: sustain double-digit revenue growth, maintain EBITDA margins in the low teens, improve returns on capital, and generate strong cash flows. We recognize that the global environment remains challenging, but we enter the second half of FY '27 from a position of greater financial and operational strength. With that, I will hand over to Manish to take you through our financial performance.
Manish Bansal (Welspun Living Ltd): Thank you, Dipali. And good evening, everyone. Q2 FY '27 reflects continued progress on growth and financial discipline. Consolidate revenue grew 16.9% year-on-year, with double-digit growth in both segments despite impact from the disruption at Vapi. A key milestone this quarter is that we have moved from net debt position to net cash, representing a strength significant improvement from net debts of 775 crore in March 2026. This has been supported by substantial improvement in cash conversion cycle, along with sustainable sustained profitability and disciplined capital management. At the same time, we have achieved our FY '27 goal of bringing ROCE into low teens ahead of schedule. Let me take you through three key aspects of our financial performance: profitability, cash generation and return on capital. First, profitability. We deliver consolidate EBITDA margin at 12.9%, an expansion of 600 basis points year-on-year and 40 basis points sequentially. This performance reflects our continue focus on operating efficiencies, procurement discipline, product mix and cost management. In an environment where input cost and consumer demand remain dynamic, our priorities is to ensure that growth translate into substantial profitability. Flooring continue to make progress with EBITDA margin reaching to 10.8%, improving both sequentially and year-on-year. The improvement reflects the benefit of portfolio transitions and our sharper focus on profitable business. We remain committed to sustaining this progress through operating efficiencies, disciplined growth and better returns. Second, cash generation and balance sheet strength. Our cash conversion cycle improvement materially from 82 days in March 2026 to 44 days this quarter. This reflect greater discipline in working capital
Manish Bansal (Welspun Living Ltd): and more efficient conversion of our operating performance into cash. The improvement in cash conversion together with our focus on cash generation and capital discipline has strengthened our balance sheet to a point where we have moved into net cash position. This provide us with a stronger financial foundation and greater flexibility to pursue strategic growth opportunities. Going forward, we will remain focused on sustaining this progress through tighter management of inventory, receivable, and payable, ensuring that cash generation remain integral of our growth strategy. Third, returns on capital. We had set ourselves the goal of improving ROCE to low teens during FY '27, and we have already reached 12.7%. This is an important milestone, reflecting progress not only in business growth and profitability, but also how efficiently we deploy capital and utilize our assets. Our focus now is to sustain and build on improvement through better asset utilization, working capital discipline, productivity, and rigorous evaluation of new investment. Our capital allocation approach remain focused. We will continue to invest selectively in capabilities, technology, productivity, and operational efficiencies, while ensuring that investments are aligned with our strategic priorities and return expectations. To summarize, we have delivered healthy revenue growth, sustained strong margins, improved our cash conversion cycle to 44 days, achieved 12.7% ROCE, and transitioned to a net cash position. Together, these developments reflect a business that is growing, generating cash more effectively, deploying capital more productively, and strengthening its financial resilience. With that, we would be happy to take your questions.
Moderator (360 ONE Capital Market): 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 remove yourself from the question queue, you may press star and two. Participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Ronak Shah with Equirus Securities. Please go ahead.
Ronak Shah (Equirus Securities): Yeah. Thanks for the opportunity, and congratulation on the strong profitability recovery. Ma'am, my first question is on the B2B part of the home textile. So, in the first half, we have seen growth recovery on a relatively lower base. However, from the fourth quarter, we are overlapping a relatively higher cycle. So structurally, how we are seeing this particular part from near-to-medium-term perspective?
Dipali Goenka (Welspun Living Ltd): So, thank you Ronak. And we I I just want to say the momentum looks intact for us. And we we are looking at a double-digit growth. And that's what, you know, we are very confident about. And that's what will be the way forward here, Ronak.
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