Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  
Google
Web www.equitybulls.com
Research

| More

CRISIL Ratings: Home textiles makers to weave revenue, profitability rebound this fiscal

Posted On: 2023-08-30 20:35:52 (Time Zone: IST)


Improved operating performance to keep credit outlook stable despite moderate capex

Revenue of the home textile industry is set to rise 7-9% this fiscal after a ~15% fall last fiscal, as India regains global share following a correction in domestic cotton prices and restocking by big-box retailers in major markets abroad.

Operating profitability will improve 150-200 basis points to 14.0-14.5%, due to lower raw material cost and better operating leverage, but will still hover below pre-pandemic levels.

Credit profiles will continue to be stable, with the ongoing capital expenditure (capex) cycle in its last leg this fiscal, and healthy cash accrual - driven by improved revenue growth and profitability - keeping leverage in check.

A CRISIL Ratings analysis of 40 companies, accounting for 40-45% of the sector's revenue, shows as much.

As much as 70-75% of the industry's revenue is from exports, with the US, its biggest market, accounting for more than half of it.

After strong headwinds in exports last fiscal, the home textile industry is on the road to recovery. Domestic cotton prices, which had risen past international prices and reached Rs 1 lakh per candy1 in May 2022, have now retracted to ~Rs 55,000 (chart 1 in annexure), helping India regain competitiveness. Moreover, orders from big-box retailers in the US will increase this fiscal as the inventory piled up last fiscal depletes on easing global supply-chain challenges, and the gradual sales recovery being seen over the past few months.

Says Mohit Makhija, Senior Director, CRISIL Ratings, "With domestic prices of raw material gaining competitiveness vis-à-vis international levels, restocking by big-box retailers in the US, and sustained China+1 policy of global buyers, revenue to rebound for export-oriented Indian home textile makers this fiscal - albeit on a low base. This is reflected in the recent increase in India's share in home textile imports by the US (including key home textiles products exported2 by India) to 47% during January-June this year (chart 2 in annexure) after falling to 44% in CY2022 from 48% in CY2021."

But capacity utilisation will improve only slowly because of the recent large capacity addition amid moderate demand growth. That will continue to keep operating margins below pre-pandemic levels.

The industry is in the midst of Rs ~4,000 crore capex, planned to be completed between fiscals 2022 and 2024.

Says Gautam Shahi, Director, CRISIL Ratings, "With only ~25% of the capex remaining to be completed this fiscal, debt is unlikely to increase substantially. That, along with improved operating performance and cash accrual will keep debt metrics stable in the current fiscal. Consequently, gearing3 is seen improving to 0.70-0.75 time as on March 31, 2024, as against 0.8 time a year earlier. Interest coverage4 will improve to 4.8-5.0 times this fiscal versus ~4 times last fiscal 2023."


Click here to send ur comments or to feedback@equitybulls.com

Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only. www.equitybulls.com, its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. www.equitybulls.com or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.





Other Headlines:

CRISIL Ratings: Agrochemicals sector to see 7-9% growth amid modest exports

SBI Capital Markets: RBI Monetary Policy Dec'24 - RBI faces arduous task of managing all dynamics: Liquidity, Currency, Growth and Inflation

SBICAPS Monthly Ecocapsule Dec'24 : FY25 - A TALE OF TWO HALVES OR ONE OF FULL DESPAIR? - Executive Summary

CRISIL Ratings: Revenue growth of organised luggage makers to halve to 8-10%

CRISIL Ratings - Cement demand to grow at a moderate pace of 7-8% this fiscal

CRISIL Ratings: For small finance banks, RoA to dip ~40 bps this fiscal

Securitisation volumes witness strong growth; likely to reach ~Rs. 60,000 crore in Q2 FY2025: ICRA

CRISIL Ratings: Operating losses of state discoms to stay high despite 15-20% dip

CRISIL Ratings: Tamil Nadu garment exporters to see 8-10% revenue growth

CRISIL MI&A: Inflated natural rubber prices to puncture tyre maker margins

Infrastructure bond issuances by public sector banks to drive banks' bond issuances to an all-time high in FY2025: ICRA

CRISIL Ratings: Apparel retailers to stitch 8-10% growth with festivals, fast fashion

CRISIL Ratings: For ARCs, rising power consumption to boost recoveries from stressed operational thermal plants

Views of ICAI on SA 600 vs ISA 600

CRISIL Ratings: Wagon makers set to roll in ~20% revenue growth this fiscal

CRISIL Ratings: Basmati industry to see revenue grow ~4% on a high base this fiscal

CRISIL: Pharmaceutical sector set for 8-10% revenue growth this fiscal

CRISIL Ratings: Flexible packaging players' credit profiles to stay subdued this fiscal

Industry credit expected to grow over 12 per cent: FICCI-IBA Bankers' Survey

CRISIL Ratings: Decadal-low duty to push gold jewellery retailers' revenues up by 22-25%

CRISIL Ratings: Education loan AUM of NBFCs to top Rs 60,000 crore this fiscal

Evolving asset quality risks to impact growth and profitability of microfinance: ICRA

Near-term Consolidation; Focus Remains on Style & Sector Rotation - Axis Securities

CRISIL Ratings: Paper packaging volume to grow, but profitability to plumb lows

CRISIL MI&A: Corporate revenue growth likely moderated to 5-7% in April-June, the slowest in 15 quarters

CRISIL Ratings: Revenue growth of auto dealers to enter the slow lane this fiscal

Declining liquidity coverage ratios to slow down credit growth for banks: ICRA

CRISIL Ratings: Road developers to see slower revenue growth of 5-7% next fiscal

CRISIL Ratings: Small finance banks to grow advances 25-27% this fiscal

Global monetary easing to pick up pace - Puneet Pal, Head-Fixed Income, PGIM India Mutual Fund

Kotak Institutional Equities: Strategy: 1QFY25: Converging trends

CRISIL Ratings: Cement makers line up ~Rs 1.25 lakh crore capex over fiscals 2025-27

CRISIL Ratings: Urea import dependency to fall to 10-15% from this fiscal

CRISIL Ratings: 20% ethanol blending goal means more sugarcane utilisation

Kotak Institutional Equities: Automobiles & Components: 1QFY25 review: Steady quarter; demand outlook weakening

CRISIL MI&A: Macroeconomics First Cut - Goods exports fall, services soften

Kotak Institutional Equities: Consumer: 1QFY25 review- Uptick in staples, continued weakness in discretionary

CRISIL Ratings: Despite cash disbursement restriction gold-loan NBFCs shine

SBICAPS Report - The Green Pill: Labelled Bond Issuances, ESG Indices, Global Sustainable Funds

We expect the 10 yr benchmark bond yield to keep drifting lower gradually - PGIM India Mutual Fund

Strategy: Faith, froth and fundamentals by Kotak Institutional Equities

Earnings growth should be the key driver of returns hereon - Vinay Paharia - CIO, PGIM India Mutual Fund

IT Services: ERD services: Auto pulse-challenges ahead - Kotak Institutional Equities

Banks, Diversified Financials : Strong on expected lines across BFSI - Quarterly Review - Kotak Institutional Equities

Metals & Mining: SC ruling-empowers the states; marginal negative impact - Kotak Institutional Equities

CRISIL Ratings: Revised deposit norms unlikely to be onerous for HFCs

CRISIL Ratings: 6 gigawatt renewable energy storage to be added by fiscal 2028

CRISIL Ratings: Thermal share in power generation to dip over 500 bps next fiscal

Indian bond market issuances exceeded $105 billion, $25 billion new equity issued in FY24 - Shri Pramod Rao, ED, SEBI

One third of Nifty 100 companies hire thousands of young talent on apna.co


Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2020