Textile companies are set to report mixed results for the April-June quarter. While spinning firms are expected to benefit from lower cotton prices, leading to improved margins, garment makers will likely face challenges due to subdued domestic demand.
According to Elara Capital, the overall textile industry may see revenue growth of 1.4 per cent year-on-year but a 5.9 per cent quarter-on-quarter decline. However, the brokerage maintains a positive long-term outlook, with Arvind Ltd being its top pick.
Spinning companies are poised to gain from lower cotton procurement costs, translating into better margins. Additionally, increased demand has boosted production volumes. In contrast, garment manufacturers are grappling with muted domestic demand, although export orders have risen due to Western retailers diversifying away from China.
Home textile firms are also expected to see improved margins thanks to favorable raw material costs.
Key players like Arvind Ltd, KPR Mill, and Vardhman Textiles are expected to exhibit varied performances based on their specific segments and market dynamics.
While Arvind Ltd is projected to witness strong garment volume growth, its overall profitability may be impacted by higher costs due to a factory strike. KPR Mill is expected to benefit from increased yarn and garment production, leading to improved margins in the textile segment. Vardhman Textiles is anticipated to see growth in the fabric category but a decline in yarn volume.