Home Textile Players Pin Hopes On Festive Fervour In FY24 For Ride To Recovery
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Home Textile Players Pin Hopes On Festive Fervour In FY24 For Ride To Recovery

Govt Extends Deadline For Textile PLI Applications To December 2023

Amid the fear of an economic slowdown due to supply chain disruptions and geopolitical crisis across the globe, India’s home textile players are pining hopes on festive fervour in the financial year (FY) 2024 for the ride to recovery.

After facing strong headwinds in the last fiscal, the rating agency Icra in a report has said that the sector fundamentals are in a comfortable position as of now and home textile players are on the road to recovery in FY2024.

Following a 25 per cent growth in FY2022, India’s home textile exports (in USD) reported a double-digit decline of 18 per cent and 12 per cent in FY2023 and 4M FY2024, respectively, amid high raw material expenses and energy inflation, coupled with a muted demand scenario in the key export markets.

The dip in the blankets and curtains product category was lower at 12 per cent compared to other categories where the reduction was 18 to 19 per cent in FY2023. In 4M FY2024, bed/table/kitchen linen witnessed a 16 per cent decline compared to 7 to 13 per cent in other categories, Icra added.

The US remains the largest market for Indian home textile exports, with a 56 per cent share in FY2023 and 58 per cent share in 4M FY2024.

“The growth impetus in the medium term would be on the back of the expected conclusion of the FTA talks with the UK and the EU, along with the FTA agreement signed with Australia and the UAE,” the report added.

Notably, in Q1 FY2024, revenues remained muted with a modest 3 per cent year-on-year (YoY) growth for Icra’s sample set of four listed home textile companies, accounting for 35 to 40 per cent of India’s home textile exports.

The rating agency expects its sample set to report 10 to 12 per cent YoY growth in Q2 FY2024 with festive orders (for Thanksgiving and Christmas shopping) coming in and also a recovery in demand conditions in key export markets.

Correction in cotton prices started from Q4 FY2023, which translated into an improvement in margins in Q4 FY2023 and Q1 FY2024 for the sample set. With relatively stable raw material prices, the margins are estimated to have remained at 15 to 16 per cent in Q2 FY2024, according to the report.

The US retail inventory levels for furniture, home furnishing, electronics and appliance stores have dipped from CY2022 levels, with destocking being almost over for the big retailers. As a result, Icra expects them to start buying in the subsequent months to restock their inventory, thereby improving the overall order book position for the home textile players.

It also expects its sample to report a 7 to 8 per cent increase in turnover in FY2024, following the 10 per cent decline in FY2023, with a recovery in demand conditions and restocking by big retailers from the US markets due to realignment of inventory levels.

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