Operating Profit Of Home Textile Sector To Improve 150-200bps
Operating profitability of the Indian home textiles sector will improve 150-200 basis points to 14.0-14.5 percent, due to lower raw material costs and better operating leverage.
In a report, Crisil Ratings added that despite improvement in operating profitability, they will still hover below pre-pandemic levels.
The ratings agency also said that revenues from the home textiles industry will increase 7-9 percent in the current fiscal, following a 15 percent decline in the previous fiscal.
Citing reasons for the rise, Crisil Ratings in a report said India will regain global share following a correction in domestic cotton prices, and restocking by big-box retailers in major markets abroad.
Credit profiles will continue to be stable, with the ongoing capital expenditure cycle in its last leg this fiscal, and healthy cash accrual, will be driven by improved revenue growth and profitability.
Crisil culled the report by doing an analysis of 40 companies, accounting for 40-45 percent of the sector’s revenue.
According to the ratings agency, as much as 70-75 percent of the industry’s revenue is generated from exports, with the US, its biggest market, accounting for more than half of it.
The Indian home textiles industry is in the midst of Rs 4,000 crore capex, planned to be completed before fiscal 2024.
