Domestic textile companies are expected to benefit from key initiatives and structural changes such as extension on rebates on central and state taxes and other levies till March 2024, China plus one policy of European and the US apparels brands, and the ban on Chinese cotton by the US. According to industry re- ports, India’s garment exports are one-tenth of China’s and one-fourth of Bangladesh’s and Vietnam’s ex- ports despite accounting for 28% of global cotton production. This is likely to change in favour of India in the coming years. ETIG offers a low- down on some of the textile companies that are expected to benefit.
Nitin Spinners: Yarn and fabric manufacturer
Nearly two-thirds of the company’s revenue comes from exports. It has doubled spindle capacity and increased knitting capacity by 30% since 2015, which augur well as global companies consider India as a viable alternative to Chinese production.
Arvind: Garment and denim manufacturer
Arvind is likely to benefit from the China plus One strategy given the timely expansion and high utilisation. The company has guided for a double-digit revenue growth with 10-12% operating margins in the coming quarters. It expects to reduce the debt of around Rs. 2,000 crore by 200-300 crore each year through internal accruals and land monetization. This should help in reducing debt relative to the operating profit before depreciation and amortisation (EBIDTA) from the current 4.5 times
Indo Count: End-to-end e bedding provider
With arising focus on fashion bedding, the company has an addressable market of $14 billion in the US. The company has guided for a double-digit revenue growth for the next four-five years with an EBITDA margin of 18-20%. Indo Count plans to expand capacity by 20% in the near term. The company is likely to gain from the Free Trade Agreement talks with the EU and the UK.
