Motilal Oswal initiates coverage on 8 textile stocks, including Arvind and Gokaldas Exports; sees up to 39% upside

Motilal Oswal has initiated coverage on eight textile and apparel companies, citing a gradual recovery in global demand, capacity additions, improving utilisation levels and potential gains from lower tariffs and free trade agreements.

The brokerage has assigned ‘buy’ ratings to Gokaldas Exports, Arvind, Pearl Global Industries, Indo Count Industries and Welspun Living, while maintaining ‘neutral’ ratings on KPR Mill, Trident and Vardhman Textiles.

Gokaldas Exports: Buy | Target price ₹1,110: Motilal Oswal expects Gokaldas Exports to deliver strong growth, driven by capacity expansion in India and higher utilisation at its Africa operations following the renewal of the African Growth and Opportunity Act (AGOA). It projects revenue, EBITDA and adjusted profit after tax (APAT) CAGR of 18%, 33% and 73%, respectively, over FY26-28 and has set a target price of ₹1,110.

Arvind: Buy | Target price ₹670: For Arvind, the brokerage expects a strategic shift from a fabric-focused business towards garments to expand its addressable market. It also sees the advanced materials division supporting profitability. Motilal Oswal has set a target price of ₹670 and expects revenue, EBITDA and APAT to grow at a CAGR of 15%, 23% and 29%, respectively, over FY26-28.

Pearl Global Industries: Buy | Target price ₹2,300: Pearl Global Industries is expected to benefit from capacity expansion across India, Bangladesh, Vietnam and Indonesia. Motilal Oswal has assigned a target price of ₹2,300 and projects revenue, EBITDA and APAT CAGR of 14%, 25% and 29%, respectively.

Indo Count Industries: Buy | Target price ₹550: The brokerage expects Indo Count Industries to gain from growth in its utility bedding business and the domestic bed linen segment. It has set a target price of ₹550, projecting revenue, EBITDA and APAT CAGR of 20%, 44% and 90%, respectively.

Welspun Living: Buy | Target price ₹200: Motilal Oswal expects Welspun Living’s home textile business to benefit from lower tariffs and potential FTAs with the UK and European Union. It has set a target price of ₹200 and forecasts revenue, EBITDA and APAT CAGR of 14%, 43% and 97%, respectively.

For KPR Mill, Trident and Vardhman Textiles, Motilal Oswal sees growth opportunities but believes current valuations limit further upside. The brokerage has given ‘neutral’ ratings on the three stocks, with target prices of ₹1,200 for KPR Mill, ₹28 for Trident and ₹700 for Vardhman Textiles.

Potential recovery in global textile trade

The brokerage expects a gradual recovery in global textile and apparel (T&A) trade, supported by inventory normalisation, easing inflation and lower tariffs across major textile-exporting countries.

The brokerage also expects export momentum, which has weakened due to subdued global demand, to recover with the help of upcoming free trade agreements (FTAs) with the UK and the European Union, favourable tariff realignments and improving incentives such as the Rebate of State and Central Taxes and Levies (RoSCTL) scheme.

Large Indian exporters positioned for market-share gains

Motilal Oswal noted that global brands are increasingly favouring large-scale and compliant suppliers with streamlined audit processes, which could position leading Indian exporters well to gain market share.

According to the brokerage’s data, the top four to five apparel and home textile players account for around 15% and 28% of export sales, respectively. Given India’s highly fragmented exporter base, the sector has significant scope for further consolidation.

China restrictions and capex cycle create fresh opportunities

The brokerage also highlighted that restrictions on China’s cotton exports to the US have created opportunities for alternative sourcing hubs such as India.

India’s large spindle capacity, presence of large-scale exporters, strong execution capabilities and abundant low-cost labour make it an attractive sourcing destination for global retailers, Motilal Oswal said.

It further noted that the Indian textile sector is entering a strong capital expenditure cycle, with leading companies announcing sizeable investments across garments, fabrics, technical textiles and value-added categories to capture rising global sourcing opportunities.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.