Indian Home Textile Companies Revenue To Rise 7-8% In FY’24
In a research note on the Indian home textiles industry, ratings agency ICRA expects revenues of its sample report companies to increase 7-8 percent year on year to Rs. 21,500 crores in the ongoing fiscal.
Additionally the ratings agency also expects operating margins to improve 250-350 bps in the current fiscal.
ICRA’s sample of four listed home textile companies account for 35-40 percent of overall India’s home textile exports.
The expectations on the hike in revenues come from an expected recovery in demand and restocking by big retailers in the US market to realign their inventory levels.
“The long-term growth prospects of the sector are encouraging, with the government’s promotional steps,” Kaushik Das, Vice President & Co-Group Head, Corporate Sector Ratings, ICRA said.
These steps include the proposed FTAs with UK and EU, along with the FTA signed with Australia and UAE and the longer-term benefit of China Plus One shift in textiles sourcing by big retailers,” he added.
India’s home textile exports reported a double-digit decline of 18 percent in fiscal 2022-23 and 12 percent in the first four months of current fiscal.
“These drops came amid high raw material expenses and energy inflation, coupled with a muted demand scenario in the US and the EU markets,” the ICRA report added.
The US remains the largest market for Indian home textile exports, with a 56 percent share in fiscal 2022-23 and 58 percent share in the April to July months of current fiscal.
“Given the high dependence on the US market, the strengthening in retail sales there remains a key demand driver for Indian exporters,” the ratings agency averred.
The US retail inventory levels for furniture, home furnishing, electronics, and appliance stores have come down from calendar year 2022 levels, with destocking being almost over for the big retailers.
As a result, ICRA expects retailers to start buying in the subsequent months to restock their inventory, thereby improving the overall order book position and revenues for FY2024 of home textile players.
The product wise breakup of the home textiles exports indicates that value-wise, bed, table, toilet, and kitchen linen remains the largest product category in exports with 32-33 percent share in fiscal 2023-24.
These are followed by carpets and floor coverings with 31 percent share in the earlier fiscal.
According to ICRA, as raw material costs account for 55-60 percent of the total operating cost for home textile exporters, the increase in yarn prices has exerted some pressure on their profitability in the current fiscal.
