Textile industry watchers expect significant growth in FY19. The country’s textile exporters had struggled through 2017. Shares of several companies stagnated for most of the year as structural readjustments in the US retail industry; the largest market; seriously dented revenue and profit, including the rising cost of raw material.
Pawan Jain, Director, Corporate Affairs, Trident, predicts, “Usually clients keep inventories on the lower side at the year end, however, this time the inventory reduction was more than usual. Expect this process to reach normalcy by Q4 and growth to return in Q1 of next fiscal.”
Credit Suisse said in a note on Welspun India , destocking at US retailers may not continue beyond one more quarter as the stock in retail channel cannot fall more than a certain level. So a recovery should reflect in the second half of the fiscal year. But the reduction in the government’s duty drawback and rebate of state levies schemes can optically lower revenue growth in the second half of the current fiscal.
ICRA noted the credit profile of domestic textile companies is stable, indicating financial health. The aggregate debt of the domestic textile industry is declining as the industry reduced debt-funded expansion. Strengthening of the Indian rupee and cotton prices could upset profitability targets, however, industry data show that US imports of cotton textiles continues to rise with India’s export share growing.