The Indian home textile industry has witnessed a strong demand revival in 9MFY22!
Despite shortages and the unavailability of shipping containers, higher freight cost and longer transit duration, a better demand scenario is likely to continue in the mid to long run on an increased consumption due to hygiene-related factors, and market share shift from China due to ban on imports of cotton-made products from Xinjiang.
Claiming this, a report of Motilal Oswal Financial Services Limited (MOFSL) has said that there is steady demand outlook from the domestic and international market.
The report’s outlook for yarn and garment players also remains positive due to higher demand for apparels from the US and Europe (from retailers) on account of the China+1 policy and the US ban on imports of cotton-made products from Xinjiang.
MOFSL expects gross margin pressures to subside in upcoming quarters with price hikes. However, it will remain under pressure till the next cotton season.
The outlook for the home textile business remains positive, with short-term risk to margin. Indian textile players are best placed to utilise this opportunity.
The report says that as per OTEXA data, India’s market share in US Cotton Sheets imports rose to 57 per cent in CY21 (v/s 52 per cent in CY20), whereas China lost ~2 per cent share. In the Terry Towels segment, India’s share has risen by 200bp to 44 per cent in CY21 (v/s 42 per cent in CY20), while China’s share has fallen by 200bp.
India’s spinning sector is seeing heightened demand due to the prohibition on Xinjiang cotton-made products and higher captive consumption of yarn in Bangladesh and Vietnam.
