Textile cos in a sweet spot with govt support | Economic Times

ET Intelligence Group: Domestic textile companies are expected to benefit from key initiatives and structural changes such as an extension on rebates on central and state taxes and other levies till March 2024, China plus one policy of European and the US apparels brands, and the ban on Chinese cotton by the US. According to industry reports, India’s garment exports are one-tenth of China’s and one-fourth of Bangladesh’s and Vietnam’s exports despite accounting for 28 per cent of global cotton production. This is likely to change in favour of India in the coming years. ETIG offers a lowdown on some of the textile companies that are expected to benefit. 85885614Nitin Spinners: Yarn and fabric manufacturerNearly two-thirds of the company’s revenue comes from exports. It has doubled the spindle capacity and increased the knitting capacity by 30 per cent since 2015, which augurs well as global companies consider India as a viable alternative to Chinese production.Arvind: Garment and denim manufacturerArvind is likely to benefit from the China plus One strategy given the timely expansion and high utilisation. The company has guided for a double-digit revenue growth with 10-12 per cent operating margins in the coming quarters. It expects to reduce the debt of around Rs 2,000 crore by Rs 200-300 crore each year through internal accruals and land monetization. This should help in reducing debt relative to the operating profit before depreciation and amortisation (EBIDTA) from the current 4.5 times.Indocount : End to end Bedding providerWith a rising focus on fashion bedding, the company has an addressable market of $ 14 billion in the US. The company has guided for a double-digit revenue growth for the next four-five years with an EBITDA margin of 18-20 per cent. It plans to expand capacity by 20 per cent in the near term. The company is likely to gain from Free Trade Agreement talks with the EU and the UK.