Crisis in Bangladesh: Shares of textiles, garments & apparel companies were in focus and rallied up to 11 per cent on the National Stock Exchange (NSE) in Tuesday’s intra-day trade on expectations of earnings improvement.
Gokaldas Exports rallied 11 per cent to Rs 1,022, RSMW surged 10 per cent to Rs 254.10, followed by Kitex Garments (8 per cent at Rs 227), Faze Three (8 per cent at Rs 558.50), GHCL Textiles (8 per cent at Rs 119.50), Indo Count Industries (5 per cent at Rs 395.50), KPR Mill (4 per cent at Rs 861.05) and Arvind (3 per cent at Rs 382.85). In comparison, the Nifty 50 was up 1 per cent at 24,295.75 at 09:41 am.
India’s gain will be an additional business of $300-400 million per month if 10-11 per cent of the neighbouring country’s export is diverted to Indian hubs like Tiruppur; the newspaper reported quoting industry experts.
Overall, government investments, coupled with growth in domestic demand on account of the rising disposable incomes and the growing popularity of ‘fast fashion’ products, promises a thrilling future for the Indian textiles and apparel industry. These factors will give an impetus to the industry despite the persistent slowdown in demand in certain key markets, according to analysts.
Meanwhile, UK imports $24 billion in apparel with India’s share a mere $1.4 billion. In contrast, UK imports $4.5billion from Bangladesh and $ 6.2 billion from China. Indian players have lower market penetration in UK due to tariff disadvantages vs Pakistan, Turkey, and Bangladesh. However, FTA with UK will allow duty free exports to UK, improving India’s competitiveness.
The intense competition in the global market, especially from the textile and garment industries in Bangladesh and China, may also prove a dampener for the industry, but strong players and fully integrated ones with a fullstack solutions, will continue to stay ahead of the curve, Arvind Limited said.
Global demand outlook
Global demand outlook for CY24 continues to be relatively stronger vis-à-vis CY2023. In tandem with global retailers’ commentary, Indian Home textile and apparel exporters expect demand to improve in coming quarters. Any normalisation of demand in CY24 (led by hospitality / residential) amidst improved global retailers’ inventory position leaves headroom for export demand recovery by Indian exporters (refer positive demand guidance by Indian players in exhi, implying orders pick up in coming quarters, analysts at JM Financial Institutional Securities said in its textile sector report.
Extended runway for revenue growth over next 3 years (courtesy impending FTAs / ’China+1’), GOI’s increased focus on textile ecosystem (rebates/PLI) and deflation in commodity price (cotton price off highs and range bound) make a strong case for improvement in FY25 earnings trajectory, the brokerage firm said.
Deleveraged balance sheet of Indian textile players leave ample room for chasing revenue growth as / when structural demand drivers pick pace. Huge addressable market size / topnotch execution/ de-leveraged balance sheet bode well for key players in the home textile/ apparel sector, it added.
First Published: Aug 06 2024 | 10:18 AM IST
