Despite the textile industry showing recovery signs, garment companies in India continue to adopt a cautious outlook as they await a boost in the momentum of their order books.

As per a report by Avendus Spark, cotton prices in India continue to be lower than global prices, aiding cotton spinners in increasing their volumes. In Q4, FY24, the sector's revenue grew by about 8 percent Y-o-Y, although a 5 percent drop in yarn prices limited overall growth. With cotton prices stabilising, value growth is expected to align with volume growth soon.

Home textile companies reported a strong quarter, with 16 percent growth in value, as Indian exporters gained market share. Despite challenges from price fluctuations, garment manufacturers reported a 4 percent revenue growth, and cotton spinners enjoyed robust margin expansion due to higher utilisation and stable cotton prices.

Indian cotton-related exports rose by 20 percent sequentially and 18 percent Y-o-Y despite a brief period where Indian cotton prices were lower than global prices. Currently, Indian cotton prices are about 13 percent higher than global prices. Garment manufacturers saw EBITDA margins improve by 177 basis points in 4QFY24 due to lower input costs, with vertically integrated players reporting better margin growth.

Home textile companies outperformed with a 15 percent Y-o-Y growth in revenues due to strong demand and increased exports, with India's market share in US cotton sheet imports reaching an all-time high of 62 percent. However, EBITDA margins fell by 80 basis points, suggesting a potential slowdown in volume demand.

Revenues from the man-made staple fibers (MMSF) sector grew by 5 percent Y-o-Y. However, cheaper imports from countries like China and Bangladesh led to pricing pressures. Capacity constraints limited volume growth for MMSF players, though several companies plan to increase capacity in the coming quarters. The Production Linked Incentive (PLI) scheme is expected to encourage further investments in MMSF yarn production.