Indian Textile Industry Shows Signs of Recovery, Says Avendus Spark Report
The textile industry is seeing signs of recovery, with global retailers and brands reporting that their inventory levels have returned to pre-COVID standards, according to a recent report by Avendus Spark. However, the report highlights a cautious outlook on demand as garment companies await a boost in order book momentum.
Indian cotton prices are currently lower than global prices, helping cotton spinners grow their volumes. In the last quarter of the fiscal year 2024 (4QFY24), the sector’s revenue grew by about 8% compared to the previous year. However, yarn prices fell by 5%, which limited the overall growth. With cotton prices stabilizing, the value growth is expected to align with volume growth soon.
During this quarter, home textile companies had a strong performance, with a 16% value growth, as Indian exporters gained market share. Despite the challenges of price changes, garment manufacturers reported a 4% revenue growth. Cotton spinners enjoyed robust margin expansion due to higher utilization and stable cotton prices.
The report observed that despite a 5% decline in yarn prices, cotton spinning companies achieved 5% revenue growth year-over-year due to strong volume growth. Cotton-related exports increased by 20% sequentially and 18% year-over-year. Currently, Indian cotton prices are about 13% higher than global prices.
In 4QFY24, EBITDA margins for garment manufacturers improved by 177 basis points, primarily due to lower input costs. Vertically integrated players reported better margin growth compared to peers. Home textile companies outperformed with a 15% year-over-year revenue growth due to strong demand and increased exports. India’s market share in US cotton sheet imports reached an all-time high of 62%.
Man-Made Staple Fibers (MMSF) saw a 5% year-over-year revenue growth. Cheaper imports from countries like China and Bangladesh led to pricing pressures. Capacity constraints limited volume growth opportunities for MMSF players. Several companies plan to increase capacity in the coming quarters, potentially driving growth. The Production Linked Incentive (PLI) scheme is expected to encourage further investments in MMSF yarn production.
Pawan Gupta, CEO and Co-founder of Fashinza, commented on the report, saying, “The top layer of exporters has started getting booked. The next couple of layers of exporters in most of the big hubs are getting many enquiries and everyone is hopeful that these enquiries will result in an order book that would be better than last year.”
