Textile stocks in top spin on Govt sops

Suresh P Iyengar Mumbai | Updated on July 15, 2021

Sector looking bullish now with Piyush Goyal as Textiles Minister: Analysts

Shares of most textile companies hogged the limelight with the government extending Rebate of State and Central Taxes and Levies scheme on exports of apparels and made-ups till March, 2024.

Most of the export-oriented textile company stocks hit new 52-week high. Welspun India and Arvind touched a new high of ₹130 and ₹111 respectively but closed at ₹125 and ₹109 due to profit-booking. Similarly, Vardhman Textile also touched a 52-week high of ₹1,660 and closed at ₹1,608. Other stocks that hit 52-week high included Himatsingka Seide, Nitin Spinners, Bonswara Syntex, Nandan Denim, Donear Industries,Suryalata Spinning and Suryalakshmi Cotton.

Analysts said besides export concession, the sector is looking more bullish now on the appointment of Piyush Goyal, as textile minister.

Vishal Wagh, Research Head, Bonanza Portfolio, said further rally of 10-15 per cent in textile stocks can not be ruled out as deputation of Piyush Goyal as Textile Minister has put higher hopes in the segment.

Exports scenario

Uncertainty on the structure and rates on export incentives had made it challenging for the exporters to price their goods over the past six to seven months. The concession announced recently covers apparels and made-ups, which account for nearly 55-60 per cent of India’s textile exports while clarity on export incentives for other textile segments still remains.

Apparel exports last year fell sharply by 25 per cent amid Covid pandemic while the global apparel trade shrunk 13 per cent. India’s share in the global apparel trade has dropped to an estimated 3 per cent last year from 4 per cent in the previous year. In comparison, shares of some of the major competing nations such as Bangladesh and Vietnam have increased to 6.8 per cent and 7.4 per cent from 6 per cent and 4.9 per cent respectively, during the same period.

Intense competition

External challenges for Indian textile exporters have also heightened with increased activities on several free trade agreements among the key trading nations, which has intensified competition from nations having a cost advantage over India.

Nidhi Marwaha, Vice President, ICRA, said scrapping of the MEIS benefits and launch of RoDTEP scheme by the Government was to make India’s export incentive schemes compatible with the WTO norms.

Clarity is needed on other textile segments including raw materials and intermediate products such as fibres, yarns and fabrics under the RoDTEP scheme, she said.

Published on July 15, 2021

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