Agree. Never invest in a business that’s going downhill. There will be occasional rallies in the stock but unless the business stops bleeding, investors will not make money. The arguments like “core franchise of the business is intact so this is a great investment opportunity” works only for Buffett, not for us.
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Though company has great profitability and company’s RoE is absolutely fantastic @ 41%+ :
https://www.screener.in/company/WELSPUNIND/consolidated/
Walmart deciding to only pull off welspun’s sheets but continuing the relationship is def. a positive news.
So even if the profitability drops, the drop may not be more than what the stock already prices in.
Disc: Not invested but between neutral to positively biased at cmp.
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But concerns are 1. High debt 2. Rising cotton price 3. Falling profit margin as now welspun can offer discounts to maintain customers. Customers can squeeze on name of this episode
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@vicky_7900…I think ROE and ROCE data on screener not matching with actual reported in AR and morning star. If you analyse the ROE and ROCE, these are better only from 2015 & 2016, which might be due to mislabeling of products and selling at higher price!! To get actual picture, we should compare it ROE and ROCE of year 2014 or before.
Disc - Not invested but watching for bottom
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Final Nails in the coffin??
How is this final nail in coffin? Didn’t Walmart say they will continue the relationship with welspun?
Edit: also, your link says ‘egyptian’ cotton sheets were just 6% of revenues. disclosure: I am not invested.
I don’t think Walmart or any other retailer would prefer to buy from a company to sell to the customer if there is a chance of the consumer suing them over authenticity of the product.
That being said the nails in the coffin I meant were the reputation of Welspun. The company may continue to operate at reduced operating margin.
Welspun has secured the ‘Interactive Textile Article and Augmented Reality System’ patent which protects the company’s new product line TILT."
Invested.
Over a period of two months things will open up and situation will get into worst .
Do we have any kind of revenue generation estimates from this patent.
According to me not in near future.
Article in Bloomberg:
I am not a moderator here but as a general rule can we please share if we are invested and if so how much is our investment (% of portfolio) to adhere to the rules of the forum. This is a great forum which has been provided to us lets ensure we follow the rules and make the most out of it.
Thanks,
Navneet
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To keep up, some suppliers have been substituting or blending in cheaper cotton, says James Hayward, Applied DNA Sciences’ chief executive officer. In the case of Pima cotton, 83 percent of tested products labeled as 100 percent Pima were made entirely or partially of another type of cotton, according to a study by the company this year.
extract from the above article. looks like eventually there will be many graves; wellspun is just the starting…Waiting for the eny audit
disc: invested c.3% of the portfolio, after crash…
An extract from the above news:
In its 1,946-page probe report, ED has accused Sharma of obtaining illegal gratification from the Welspun Group for allegedly allotting land to the company in Kutch at a much lower rate, causing loss to the public exchequer. In return, Sharma’s wife Shyamal got 30% partnership in company’s subsidiary unit Value Packaging and that she was paid Rs 29.5 lakh by the company though she had never visited the office.
Will it anyhow affect the current situation of Welspun Ind?
Disc: Invested.
Latest News on Welspun
Indian textiles will gain from US President Donald Trump’s protectionist stance against China as the country is the largest cotton manufacturer in the world and benefits from surplus cotton, says Welspun India’s Altaf Jiwani. Speaking to CNBC-TV18, Jiwani says the company is likely to maintain 22-23 percent operating margin over the next 2-3 years. The innovative products pipeline is growing significantly 36 percent revenue contribution, he says, adding, the recently-launched Hygro Cotton business is receiving good response and has reached USD 200 million on an annualised basis. The company is increasing its rug manufacturing capacity at Vapi to 10 million square metres from 8 million by end of this quarter. The company posted 3.9 percent year-on-year increase in Q3 revenue to Rs 1,500.9 crore, while profit was down 16.2 percent at Rs 149.4 crore.
Agreement signed with CEA and announced on Thursday, Welspun India will invest $3 million towards various initiatives to enhance the supply chain of Egyptian cotton – from cultivation to the final product. The two entities will also create joint programmes for the promotion of Egyptian Cotton logo in retail markets across the globe.
“The Cotton Egypt Association, post verifying Welspun’s quality and supply chain reliability processes, has granted the company the right to use the Egyptian Cotton logo for five years until 2022,” the statement said. “Notably, Welspun had undertaken stringent audit and traceability programme to ensure the best product quality that is certifiable, verifiable and auditable.”
For moe details read
IMO every serious investor should read and re-read the thread from 20/Aug/16 onwards to understand how stock nosedived to more than half to almost fully recover in less than 6 months, market sentiments at play, what really changed during this time and lessons, which I’m sure are a plenty, to learn from the same.
One more episode which has validated and revalidated my strong belief that “Market Uncertainties and Inefficiencies are friends of informed investors”
Disc: No Investment.
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I would like to quote Howard Marks explanation here.
“We have to practice defensive investing, since many of the outcomes are
likely to go against us. It’s more important to ensure survival under
negative outcomes than it is to guarantee maximum returns under favorable
ones.”
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http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/d9758cbf-d9be-4fc4-8111-7bf81a152372.pdf
Q4 results are out
NP looks a tad lesser but top line ok.,after all the Target trauma, I guess this is expected
The Board of Directors at their meeting held on April 25, 2017,have recommended a dividend at the rate of 65% (i.e. Re. 0.65/- per share on equity share of Re. 1/- each) for approval of equity shareholders in the forthcoming Annual General Meeting