India’s home textiles industry is likely to see revenue growth of 6-8% for the fiscal year, with significant expansion coming from the domestic market and resilient demand from key export destinations, particularly the US, according to a recent report released on Tuesday, November 5.
Textile industry witness 9-10% revenue growth in 2023
After seeing a 9-10% revenue growth last year, India’s home textile industry is expected to grow by 6-8% this year. This growth is driven by strong demand from the US and expansion in the domestic market, despite some ongoing logistical challenges, as per a report by Crisil Ratings.
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Due to healthy cash flow, controlled spending on expansion and upgrades, and reduced debt, India’s home textile companies are expected to maintain financial stability. The industry relies heavily on exports, which account for 70-75% of its revenue, with the US being the largest market, contributing 60% of export revenue. The remaining 25-30% comes from the domestic market, providing a stable foundation for the sector’s growth.
Home textiles exported by India to US remain steady- Crisil Ratings Senior Director
According to India Retailing, Crisil Ratings Senior Director Mohit Makhija stated, “Three factors will drive growth of the home textiles industry this fiscal. One, resilient consumer spending and normalised inventory levels at major retailers in the US will spur exports, though container availability bears watching. Two, the industry’s continued focus on expanding domestic presence will aid growth.”
Further, he mentioned that domestic cotton prices, which are the main raw material, are expected to stay close to international prices, keeping Indian companies competitive. “Therefore, for the home textiles exported by India, the country’s share in US imports will remain steady this fiscal – in January-August 2024, it was 30 per cent, same as in calendar year 2023,” he added.
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Meanwhile, as per the report, international cotton prices fell below domestic prices between June and September 2024 due to increased supply from Brazil and the US. However, with India’s cotton season starting, the gap between domestic and international prices is expected to close, helping maintain India’s export competitiveness.
With domestic raw material prices on a par with international prices, operating margins are expected to be stable at 14-15% in the year, just like last year. Home textile companies have invested Rs 8,500 crore for capacity building from 2019 to 2024.
As revenues gradually increase, the industry is expected to use 60-70% of its capacity this year. Most companies aim to optimise this utilisation, though a few large ones are planning capital expenditures with reduced debt levels, the report added.
“With steady operating performance and moderate capex in fiscal 2025, the interest coverage for home textile companies should remain stable at 5-6 times. Healthy cash accrual is likely to reduce dependence on external debt for working capital, which will keep the total outside liabilities to tangible net worth ratio low at 0.6-0.7 times this fiscal (0.7 times last fiscal),” Crisil Ratings Associate Director Pranav Shandil told.
