The operating performance of downstream textiles segments, mainly readymade garments (RMG) and home textiles, moderated last fiscal for three reasons: decadal high cotton prices, geopolitical headwinds posing supply-chain challenges, and slowing export demand.
However, both RMG and home textiles are now on the road to recovery with high single-digit revenue growth expected this fiscal, along with improvement in profitability.
A substantial softening of cotton prices, buoyant domestic demand and improving competitiveness of Indian exporters are tailwinds that support this recovery.
Although the imminent slowdown in the US and the European economies will keep export demand growth in check this fiscal, the low revenue base of last fiscal and efforts by central banks to control inflation should support modest recovery in these economies.
Aided by recovery in operating performance, credit profiles of manufacturers in both segments are expected to improve this fiscal. Capex requirements are seen moderate, obviating the need for significant debt addition, which, in turn, is also supportive of credit profiles.
Given this backdrop, CRISIL is organising a webinar on the downstream textiles sector, titled 'Ironing out wrinkles', where our experts will delve into:
Demand outlook for the RMG and home textile manufacturers
Competitiveness of India's downstream textile manufacturers in key export markets
