The Indian textile companies are likely to report healthy growth in turnover in FY ’23, while the margins are expected to moderate amidst cost pressures.
A report by credit rating agency ICRA has said that although the performance of Indian textile players was impacted by macro-economic headwinds in the second quarter of 2022-23, the companies may witness a healthy turnover in the ongoing financial year.
ICRA said that inventory levels of apparel exporters declined as the large retailers focused on reducing inventory due to a weak demand scenario in key exporting regions.
It further adds that the Indian cotton spinners will experience some moderation in performance in FY ’23 compared to the previous fiscal, while Indian apparel exporters are likely to have a healthy growth in revenues in 2022-23.
Sahil Udani, Assistant Vice-President and Sector Head, Corporate Sector Ratings, ICRA said, “The revenue and margins of Indian cotton spinners dipped in the second quarter of FY ’23 due to macro headwinds. The revenue and margins remained flat for the apparel segment with recessionary conditions in key markets.”
ICRA said that the impact is steeper for smaller players as large scale companies’ benefit from cost savings on bulk purchases of raw materials. “Inventory levels for most players declined in H1 FY ’23, with sharp volatility in cotton prices affecting the buying power of spinners,” the report reads.
However, unlike the cotton spinners, Indian apparel exporters’ revenue grew by 4.5 per cent on a Y-o-Y basis. The agency said, “The healthy growth trend continued in the first quarter of FY ’23 followed by all-time high revenues registered in FY ’22.”
