Home / Industry / Retail /  Home textile exporters may report 20% jump in revenue in FY22: Crisil

Home textile exporters may report 20% jump in revenue in FY22: Crisil

Exports account for 60% of the  ₹55,000 crore Indian home textiles industry, which comprises products such as terry towels, bedsheets and spreads, pillow covers, curtains, rugs and carpets. Photo: MintPremium
Exports account for 60% of the 55,000 crore Indian home textiles industry, which comprises products such as terry towels, bedsheets and spreads, pillow covers, curtains, rugs and carpets. Photo: Mint

  • Export demand has been healthy so far this fiscal and is expected to stay strong in the third quarter, going into the festive season, as the impact of the pandemic wanes, Crisil said

New Delhi: Exporters of home textiles are set to report 20% surge in revenue in fiscal 2022, and also grow global market share, ratings agency Crisil said.

Exports account for 60% of the 55,000 crore Indian home textiles industry, which comprises products such as terry towels, bedsheets and spreads, pillow covers, curtains, rugs and carpets.

The pandemic had impacted global demand for such products.

The growth will come on the back of—strong retail sales in the US and better outlook for the upcoming festive season in export-dominated markets. This, along with global companies adopting a ‘China plus one’ sourcing strategy is likely to benefit homegrown home textile exporters, Crisil said in its note on the sector on Monday. The rating agency analysed 50 companies that export home textile goods.

“Export demand has been healthy so far this fiscal and is expected to stay strong in the third quarter, going into the festive season, as the impact of the pandemic wanes," Gautam Shahi, director, Crisil Ratings said.

Home furnishing retail sales in the US—a key export market that accounts for 55% of the export revenue pie of the Indian home textile sector. Exports to the market grew 42% year-on-year in the first half of calendar 2021, compared with 15% growth in the corresponding pre-pandemic period of calendar 2019, Crisil estimates suggest.

“Also, the ‘China plus one’ strategy is clearly playing out. This is visible in a sharp increase in India’s share of US imports of cotton bed sheets and terry towels to 51% in the first eight months of calendar 2021 versus 46% in calendar 2020, while that of China has reduced to 16% from 20%," it said.

In another encouraging sign, average capacity utilisation of three large listed home textile players in the bed linen segment increased to 87% in the first quarter of the fiscal when compared to pre-pandemic levels of 68%.

Crisil also expects the companies it analysed to improve their operating profitability by 200-250 basis points to 18% this fiscal.

Extension of the Rebate of State and Central Taxes and Levies (RoSCTL) scheme till March 2024 and better coverage of fixed costs from higher capacity utilisation will help offset the sharp increase in prices of cotton, the key raw material, it added.

However, it said attempts by companies to gain greater market share and expand cap-ex is likely to translate into higher debt levels in the near to medium term.

“Improvement in operating profitability will offset the impact of higher debt levels, lending a positive bias to credit quality of home textile manufacturers. We expect the interest coverage ratio for CRISIL-rated home textile players to improve to 6-6.5 times over the medium term from 5.5 times in fiscal 2021, while the ratio of debt to earnings before interest, taxes, depreciation and amortisation (Ebitda) will also improve to 2-2.2 times from 2.5 times," said Kiran Kavala, Associate Director, Crisil Ratings.

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