Textile and clothing, one of the country’s most dynamic industries, is on a revival path. This bull run has translated to an uptick in textiles stocks on the bourses. Top performers such as Trident, Alok Ind, KPR Mills, Lakshmi Machine Works (textile machinery major), Welspun, Raymond, Vardhaman Textiles Ltd, have seen a turnaround in their fortunes. 

In May 2023, Sharekhan, with a Buy recommendation, kept the target price for KPR Mills at ₹685 and in June it has revised upwards to ₹800. ICICI Direct had suggested a Buy recommendation for Gokaldas Exports, Siyaram Silk Mills, Vardhaman Textiles, and Nitin Spinners. 

Brushing aside the headwinds such as Covid pandemic, global recessionary trends, Russia-Ukraine war, volatility in raw material prices, inflation, etc, the industry is expected to witness significant growth. Thanks to rising demand from emerging economies, strong demand for home textiles (that accelerated during the pandemic period), and medical textiles during the pandemic.

The government’s measures ranging from giving a push to technical textiles, the PLI scheme, launch of mega textile parks under the PM-Mega Integrated Textile Region and Apparel (PM MITRA) scheme, Silk Samagra scheme to boost sericulture and silk industry, SAMARTH Yojana aimed at skill development, to signing of FTAs with many countries, etc have helped. 

“Textile as a space is yet to fire up the way many of the other sectors and themes have done in the last few months. However, it had its fair share of outperformers, albeit a few which witnessed a strong and consistent upside. The outlook of the sector has turned positive based on majority of stocks forming a base pattern on the weekly charts. 

“However, the rally is expected to start in selective stocks and then move towards the other stocks which will make stock picking a pivotal point. Stocks like KPR Mill and Gokaldas Export will remain at the forefront with bouts of outperformance expected going forward, whereas others like Zodiac Clothing, Ambika Cotton and Himatsingka Seide are expected to witness a fresh uptrend after forming rounding bottom pattern on the weekly charts,” says Gaurav Bissa, Vice-President, InCred Equities. 

Range-bound rates

One of the advantages that textile mills enjoy is that prices of raw materials have stabilised and will rule at these levels until the end of the cotton season in September. This is because farmers had held back their produce at the start of the season and are now offloading it. “Cotton prices will remain range-bound,” said Rajkot-based cotton, yarn and cotton waste trader Anand Popat.

However, spinning mills are troubled by lack of demand for yarn and they are operating on thin margins. Cotton prices will remain range-bound, he said.  

A textile industry source said organised players in the sector are calling the shots and they would be able to do well. 

ICICI Securities has recommended a Buy on Gokaldas. Though it raises concerns about falling readymade exports, it feels correction in cotton prices and lower freight costs will help the sector rebound. “RMG exports declined 7 per cent y-o-y in May 2023 and 12 per cent y-o-y in Apr-May 2023. We do not expect y-o-y growth in monthly exports till H1FY24 as retailers may look to liquidate their inventory in an uncertain demand situation.” 

Meanwhile, JM Financial projects a stronger 2HFY24 demand outlook for the textile sector. “Reduced cotton prices (down over 40 per cent in 12 months) coupled with improving scale in H2 2023 could lead to a material margin boost. With UK FTA ($1billion additional opportunity for India) in the horizon and possibility of “China+1” picking pace can significantly re-rate earnings and multiples for the space,” a note said. Gokaldas Exports and Welspun India remain a key beneficiary, the note added.  


The second largest employer after agriculture, textiles industry has seen an FDI inflow of $1.5 billion from 2017-22.  The Indian apparel market was worth $55 billion as of 2020 and is expected to grow at a CAGR of 10 per cent to $190 billion by 2025. On the raw material front, India will receive the benefits of allowing the import of 51,000 tonnes of duty-free cotton from January 2023 and 419 tonnes of duty-free cotton from December 29-31, 2022, from Australia. These are significant as the domestic textile industry will be insulated from the shortage of quality cotton with the increasing demand. 

India is targeting an average GDP growth of over 7 per cent per annum to become a $5-trillion economy by 2025-26. As the world’s fifth-largest economy with a population of 1.4 billion people, and with demand for home products increasing at 20 per cent per annum, business growth opportunities are galore for textile sector and the stocks too are likely to perform well. However, cyclical nature of the industry and raw material price fluctuations — globally and domestically — are to be watched for.