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Welspun Living Q4 FY26: Margins Recover Sequentially as Cash Flows Drive Debt Down

Welspun Living closed Q4 FY26 with a clear sequential improvement after a volatile year for global textiles. For the quarter ended March 31, 2026, total income came in at ₹2,451.2 crore, up 7.7% over Q3 FY26, while EBITDA rose to ₹264.9 crore. The quarterly EBITDA margin improved to 10.8%, a 313 bps jump QoQ. Profit after tax (after minority interest) stood at ₹103.7 crore.

The full year picture was weaker on topline and profitability, reflecting the external disruption management described. FY26 total income was ₹9,467.9 crore, down 11.5% YoY. EBITDA for FY26 was ₹862.0 crore with a margin of 9.1% versus 13.6% in FY25. PAT after minority interest was ₹204.4 crore.

What changed the tone of the year-end discussion was cash generation. FY26 free cash flow was stated at ₹956 crore and net debt reduced sharply to ₹775.4 crore as of March 2026, down 52% from March 2025. The company positioned this as the outcome of sustained cost discipline and tighter working capital management.

Q4 showed operating leverage and better discipline

Management described FY26 as a year of tariff volatility, geopolitical disruptions, and softer discretionary demand. The fourth quarter was described as a stabilisation phase, with early signs of improved customer visibility as tariff uncertainty eased. The improvement in Q4 profitability was attributed to better utilization, improved product mix, cost rationalisation and favourable forex realisation.

The company’s balance sheet metrics moved in the right direction. Net debt to equity was highlighted at 0.16x (vs 0.33x in FY25) and cash conversion cycle improved to 82 days (vs 94 days in FY25). Returns, however, remained pressured, with ROE at 4.2% and ROCE at 5.6% for FY26.

Segment performance: Home Textiles steady, Flooring still weak

Welspun Living remains heavily driven by home textiles. In FY26, Home Textile revenue was ₹8,939.9 crore, accounting for 92.4% of revenue, while Flooring revenue was ₹735.5 crore, accounting for 7.6%.

Profitability remains a key gap to close. FY26 Home Textile EBITDA margin was 8.7% and Flooring EBITDA margin was 3.9%. In the presentation, management set medium-term margin goals: home textile margins improving towards 15% and flooring margins improving towards high single digits.

Flooring was described as the most vulnerable business during the West Asia logistics disruption and US tariff headwinds. Management indicated that soft flooring has better margin potential and said the business is diversifying across Australia, New Zealand, the Middle East, and Europe.

Branded portfolio and non-US growth are the strategic levers

A recurring theme across the presentation and call was the push for diversification. Management highlighted that non-US markets are now around 41% of revenue, with a stated aspiration of 50% plus over time.

The other lever is branded. The presentation indicated branded business is about 19.3% of revenue, and the company framed this as a consumer-led growth engine with better margin resilience and stickier demand. The brand portfolio referenced included CHRISTY and wellhome globally, and Welspun, SPACES, and Welspun Hospitality domestically.

Domestic consumer business was highlighted as a bright spot. Management said the domestic consumer business grew 29.2% YoY in Q4 and achieved EBITDA breakeven in the quarter. This was positioned as an important step in building a more diversified growth profile.

On the call, management also linked the medium-term opportunity to India’s trade agreements. The India UK FTA (signed Jul 2025) and India EU FTA (concluded Jan 2026) were framed as structural tailwinds that improve India’s sourcing competitiveness beyond the US.

Capex, US pillow expansion, and capital returns

Welspun Living continued investing selectively through FY26. FY26 capex was stated at ₹472 crore and FY27 capex guidance was ₹400 crore to ₹500 crore, largely for modernization, automation and debottlenecking.

A notable operational milestone was the US pillow strategy. Management said the Ohio pillow facility is ramping with utilization around 60% and the Nevada greenfield pillow facility partially commenced commercial production on March 31, 2026. Management indicated the pillow business could roughly double in FY27 to around USD 60 million from about USD 27.5 million in FY26.

The Board also announced shareholder return actions and an ESG-related investment.

• Dividend recommendation: ₹0.10 per share (10% on face value of ₹1) for FY26, subject to shareholder approval. Record date stated as July 10, 2026.
• Buyback approval: tender offer buyback of up to 1,44,00,000 shares at ₹175 per share for an amount not exceeding ₹252 crore. Record date for eligibility is May 22, 2026.
• Renewable energy: approval to acquire 26% stake in CleanMax Dhyuthi Private Limited for ₹760 lakhs (₹7.6 crore) to enhance renewable energy supply to the Vapi factory, with indicative completion by August 31, 2026.

Takeaways

Welspun Living’s Q4 FY26 numbers showed a visible sequential recovery in profitability, supported by operating discipline and improved mix. FY26 was weaker on revenue and margins, but strong free cash flow and working capital improvements materially strengthened the balance sheet.

The near-term focus is clear from management commentary: pursue double-digit growth and move EBITDA margins into the teens in FY27, while continuing to diversify beyond the US and scale branded and domestic businesses. The commissioning of the Nevada pillow facility and the buyback announcement add tangible milestones to track in the coming year.

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