July 12, 2024
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Stock Market

Are Textile stocks on the road to revival?

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Stock Market

Are Textile stocks on the road to revival?

Textile Stocks: The story of India’s textile industry is often overshadowed by flashier sectors. But have you ever wondered how this industry quietly leaves a lasting impact on every stitch of its progress? Their impact goes far beyond aesthetics. They provide a rich cultural heritage and act as a backbone for millions of people.

The textile industry empowers rural communities and provides employment opportunities for countless individuals. They also act as a potential driver for economic growth by powering exports to attract foreign investments and significantly contributing to the nation’s GDP. As the world moves towards innovation this industry also embraces it and focuses on sustainability for a brighter future.

Come let’s try to understand the Industry as a whole and look into some stocks in the industry.

Textile Industry Overview

India’s textile industry is one of the most diverse and oldest sectors in the country’s economy, with a rich history spanning centuries. It encompasses a wide range of activities, from traditional hand-spun and hand-woven textiles to modern, capital-intensive mill operations.

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The industry’s strength lies in its robust production base, which includes both natural fibres like cotton, jute, silk, and wool, as well as synthetic and man-made fibres such as polyester, viscose, nylon, and acrylic. The textile sector plays a crucial role in India’s economy, contributing 2.3% to the country’s GDP, 12% to exports and13% to industrial production.

During the period of 2018 to 2023 the Indian textile industry saw a decline of 11.69% from $16.24 billion to $14.34 billion. In order to revive, the government has planned to adjust its Production Linked Incentive (PLI) scheme to include product lines like Innerwear and t-shirts. The industry also wants to make the scheme more accessible by concentrating on the labor intensive apparel sector.

Many companies are also advocating for lower initial capital requirements and focusing on creating demand for large mills through apparel factories. It is projected to double its GDP contribution to 5% by the end of this decade. The market for Indian textiles and apparel is expected to grow at a 10% CAGR, reaching US$ 350 billion by 2030.

India ranks as the world’s third-largest exporter of textiles and clothing, with exports anticipated to hit US$ 100 billion. The industry employs around 4.5 crore workers, including 35.22 lakh handloom workers, making it a significant source of employment. The government has introduced various schemes to attract private equity and boost employment, such as the Scheme for Integrated Textile Parks (SITP), Technology Upgradation Fund Scheme (TUFS), and Mega Integrated Textile Region and Apparel (MITRA) Park scheme.

India’s position in the global textile market is strong, with the country being the world’s largest producer of cotton. The technical textile sector, including medical textiles and composites, shows promising growth potential. The government has also taken steps to promote the industry through initiatives like the National Technical Textiles Mission and allowing 100% FDI under the automatic route.

list of Textile stocks

Raymond

Raymond was incorporated in 1925, it acts as a predominant player in the textile and apparel industry by manufacturing a wide range of readymade garments and fabrics. They sell their products through their extensive retail network and also export to international markets.

Raymond’s plans

Raymond plans to expand its Ethnix retail brand to over 200 stores by 2025. With a mix of 25% company-owned stores and 75% being operated under franchises. The company wants to invest Rs 200 crores in garmenting capex with plans of becoming the 3rd largest suit maker in the world. For the next two years, Raymond targets to achieve 18-20% annual growth in presales for their lifestyle business.

Grasim Industries

Grasim Industries was established on August 25, 1947 in Gwalior. The company started its journey as a textile manufacturer and produced fabrics. As days passed Grasim diversified itself into different sectors like textiles, chemicals, cement and financial services.

Grasim Industries plans for the future

Grasim has mentioned that the company is moving towards from pure manufacturing to retail so that they can attract more customers and generate high revenue in the B2C segment. The company’s retail brand Linen Club is now operating with 230 Brand outlets and it is available at 9000 + multi-brand outlets.

Grasim with its Viscose Staple Fiber segment is looking for opportunities to debottleneck its capacity to achieve 4-5% growth compared to that of the previous year.

Arvind ltd

Arvind Ltd started its journey as Arvind Mills Ltd in 1931. As a company, it started manufacturing high-end superfine cotton textiles and fabrics. Over the years the company diversified itself into various segments which include textile manufacturing, brand apparel, retail, engineering solutions and real estate.

Arvind Ltd future plans

Arvind Ltd expects its garments business to grow by 25% in FY 25. To increase the garment capacity from 45 million pieces to 60 million pieces over the next year the company continues to invest in its operations. The company aims to get a 20% return on capital employed (ROCE) from its overall textile business.

Arvind Ltd has also commissioned its first agro-fuel boiler to replace fossil fuels. The company wants to increase its consumption of renewable energy to meet 90% of its power requirement compared to that of its current 47%.