Home Textile Industry Banks on Festive Season in FY2024 for Recovery: ICRA

0
478

ICRA anticipates sample home textile firms to report 7-8% YoY revenue growth to reach INR 215 billion in FY2024. The expected boost comes from demand recovery and US retailers restocking their inventories. The sample includes Welspun, Trident, Himatsingka, and Indo Count, collectively representing 35-40% of India’s domestic textile exports.

Mr Kaushik Das, Vice President & Co-Group Head, Corporate Sector Ratings, ICRA, commented on this, saying, “ICRA expects home textile exporters to be on a road to recovery, as restocking by big retailers from the US markets has started since Q1 FY2024. Further, as our channel checks indicated, with the festive orders coming in from Q2 FY2024, the order book position is estimated to have improved for home textile exporters. The long-term growth prospects of the sector are encouraging, with the Government of India’s promotional steps (including the proposed FTAs with the UK and the EU, along with the FTA agreement signed with Australia and the UAE) and the longer-term benefit of China Plus One shift in textiles sourcing by big retailers”.

India’s home textile exports faced an 18% and 12% decline in FY2023 and 4M FY2024 due to rising raw material costs, energy inflation, and reduced demand in the US and EU markets. The US market, with a 56% share in FY2023 and 58% in 4M FY2024, is crucial for Indian exporters. As US retail inventory levels stabilize, ICRA foresees increased orders, boosting revenues for Indian home textile players in FY2024.

In FY2023 and 4M FY2024, bed/table/toilet/kitchen linen was the main category (32-33% share), followed by carpets & floor coverings (31% share). ICRA forecasts unchanged product share in the medium future.

Higher yarn prices pressed raw material costs, which account for 55-60% of domestic textile exporters’ expenses in FY2023. However, a further 25% fall in cotton yarn costs between April and September 2023 is projected to help margins, with ICRA projecting a 250-350 bps increase to 14.5-15.5% in FY2024 due to cost optimization and scale benefits.

Leave a Reply