India’s textile industry players recently announced their Q2 FY25 results and the performances were mixed. While some companies exceeded expectations, others faced challenges, highlighting a complex state of affairs. However, despite some setbacks, the long-term outlook for the industry remains positive.
Highs and lows marked the quarter
Varying revenue growth: While some companies like Vardhaman Textiles reported 4.38 per cent year on year (YoY) revenue increase others like Ambika Cotton and Sutlej Textiles and Industries Limited saw a drop. This disparity highlights the uneven nature of the recovery in the sector.
Profitability concerns: Despite revenue growth, profitability remains a concern for some companies. Vardhaman Textiles, for instance, saw a 17.47 per cent quarter on quarter decline in profit, despite a YoY increase. This suggests that increasing input costs and other operational challenges are impacting margins.
Strong exports: The export market continues to be a bright spot for the industry, with several companies reporting strong growth in overseas shipments. This is driven by factors such as the ongoing recovery in key export markets and the competitive advantage offered by Indian textiles.
Table: Revenue and profit growth
|
Company |
Revenue growth (YoY) |
Profit growth (YoY) |
Key takeaways |
|
Vardhaman Textiles |
4.38% |
46.57% |
Strong YoY growth in both revenue and profit, but QoQ profit decline raises concerns. |
|
Arvind Limited |
14% |
7% |
Robust recovery from Q1 challenges, driven by strong performance in textile division. |
|
Welspun India |
15.50% |
Strong revenue growth driven by exports, but profitability data not yet available. |
|
|
Ambika Cotton Mills |
Faced revenue decline, highlighting challenges in the domestic market. |
Factors influencing performance
There are several reason for this kind of performance in the sector. Fluctuating raw material prices is a major one. Volatility in cotton prices continues to impact the industry, affecting input costs and profitability. Global economic slowdown too is impacting demand for textiles, particularly in the export market. Increasing competition from countries like Bangladesh and Vietnam is putting pressure on Indian textile companies. However, government initiatives such as the Production Linked Incentive (PLI) scheme are expected to provide a boost to the industry in the long term.
While the long-term outlook for the industry remains positive, some concerns still needs to be addressed. First, the disparity in performance between different companies highlights the need for greater consistency and resilience in the sector. Despite revenue growth in some cases, declining profits is a concern that needs to be addressed through cost optimization and efficiency improvements. And while exports are currently strong, the industry needs to reduce its dependence on overseas markets and focus on strengthening domestic demand.
Overall, the Q2 FY25 performance of the Indian textile industry is mixed compared to the same period last year. While some companies have shown strong growth, others have faced challenges. The industry is facing complex environment with various headwinds and tailwinds. The long-term outlook remains positive, but addressing the current challenges will be crucial for sustained growth.
