Welspun Living Ltd is Rated Sell

Current Rating and Its Significance

MarketsMOJO’s Sell rating on Welspun Living Ltd indicates a cautious stance towards the stock, suggesting that investors should consider limiting exposure or potentially exiting positions. This rating is based on a comprehensive evaluation of four key parameters: Quality, Valuation, Financial Trend, and Technicals. The Sell rating reflects a balance of concerns and opportunities, signalling that while the stock may offer some upside, risks currently outweigh the positives.

Rating Update Context

The rating was revised from Strong Sell to Sell on 09 October 2025, accompanied by a notable improvement in the Mojo Score from 28 to 47. This change reflects a partial recovery in the company’s outlook, yet the overall assessment remains cautious. Investors should note that all financial data and performance indicators referenced here are current as of 11 February 2026, ensuring the analysis is relevant to today’s market conditions.

Quality Assessment

Welspun Living Ltd’s quality grade is assessed as average. This suggests that the company maintains a moderate level of operational efficiency and business stability, but lacks strong competitive advantages or robust growth drivers. The company’s operating profit has experienced a negative compound annual growth rate of -2.50% over the past five years, indicating challenges in sustaining long-term profitability. Additionally, the return on capital employed (ROCE) for the half year stands at a low 9.04%, signalling limited efficiency in generating returns from invested capital.

Valuation Perspective

The valuation grade is fair, implying that the stock is neither significantly undervalued nor overpriced relative to its fundamentals and sector peers. Investors should be aware that while the current price may offer some value, it does not present a compelling bargain. The company’s market capitalisation remains in the smallcap category, which often entails higher volatility and risk compared to larger, more established firms in the garments and apparels sector.

Financial Trend and Profitability

The financial grade is negative, reflecting ongoing challenges in profitability and earnings consistency. Welspun Living Ltd has reported negative results for five consecutive quarters, with the latest quarterly profit after tax (PAT) at ₹12.98 crores, representing a steep decline of 90.4% compared to the average of the previous four quarters. The operating profit to interest coverage ratio is also at a low 3.54 times, indicating limited buffer to meet interest obligations comfortably. These factors highlight persistent financial stress and subdued earnings momentum.

Technical Outlook

Technically, the stock exhibits a mildly bullish trend, supported by recent price movements. As of 11 February 2026, the stock has gained 3.00% in the last trading day and recorded a 1-month return of 13.95%. Over the past six months, the stock has appreciated by 23.98%, and the year-to-date return stands at 7.80%. Despite these positive price trends, the technical grade remains cautious due to underlying fundamental weaknesses.

Stock Returns and Market Performance

Welspun Living Ltd’s stock performance shows mixed signals. While the 1-year return of 13.81% is respectable, it is important to contextualise this within the company’s financial struggles and sector dynamics. The short-term volatility, including a 1-week decline of 2.56%, suggests that the stock remains sensitive to market sentiment and operational developments. Investors should weigh these returns against the company’s fundamental challenges before making investment decisions.

Implications for Investors

The Sell rating advises investors to approach Welspun Living Ltd with caution. The company’s average quality and fair valuation are overshadowed by a negative financial trend and only mildly bullish technical signals. For risk-averse investors, this rating suggests considering alternative opportunities with stronger fundamentals and more stable earnings profiles. For those with a higher risk tolerance, the stock’s recent price gains may offer short-term trading prospects, but the underlying financial weaknesses warrant careful monitoring.

Sector and Market Context

Operating within the garments and apparels sector, Welspun Living Ltd faces competitive pressures and evolving consumer preferences. The sector has witnessed varied performance across companies, with some benefiting from export demand and others grappling with input cost inflation. Welspun’s smallcap status adds an additional layer of risk, as smaller companies often have less financial flexibility and market influence. Investors should consider these sector dynamics alongside the company’s individual performance when evaluating the stock.

Summary of Key Metrics as of 11 February 2026

To summarise, the key financial and performance indicators for Welspun Living Ltd are as follows:

• Mojo Score: 47.0 (Sell grade)
• Operating profit growth (5-year CAGR): -2.50%
• Consecutive quarters with negative results: 5
• Latest quarterly PAT: ₹12.98 crores, down 90.4%
• ROCE (Half Year): 9.04%
• Operating profit to interest coverage (Quarterly): 3.54 times
• Stock returns: 1D +3.00%, 1M +13.95%, 6M +23.98%, 1Y +13.81%

These figures illustrate a company facing financial headwinds despite some positive price momentum. The Sell rating reflects this nuanced picture, advising investors to remain cautious and vigilant.

Conclusion

Welspun Living Ltd’s current Sell rating by MarketsMOJO, last updated on 09 October 2025, is grounded in a thorough analysis of quality, valuation, financial trends, and technical factors. While the company shows some signs of recovery in stock price, its financial performance remains under pressure with negative profitability trends and modest operational efficiency. Investors should carefully assess their risk appetite and investment horizon before considering exposure to this stock, keeping in mind the latest data as of 11 February 2026.

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