Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Textiles Sector Analysis Report 

[Key Points | Financial Year '19 | Prospects | Sector Do's and dont's]

One Stock Crorepati: The Biggest Money-Making Opportunity Available Right Now
  • India’s textile industry is among the oldest industries in the country dating back several centuries. It is one of the largest contributors to the economy accounting for 4% of the GDP.
  • It is the second largest contributor towards employment generation, after agriculture, contributing 10% to the country’s manufacturing, owing to its labor-intensive nature.
  • The textile and apparel industry can be broadly divided into two segments-yarn and fiber, and processed fabrics and apparel. Increased penetration of organized retail, favorable demographics, and rising income levels are likely to drive demand for textiles.
  • The textiles and apparel industry constitutes 14% of the total exports of the country. India is the second largest producer and exporter of textiles after China and fourth largest producer and exporter of apparel after China, Bangladesh and Vietnam.
  • The Indian textiles industry is extremely varied, with the hand-spun and hand-woven textiles sectors at one end of the spectrum, while the capital intensive sophisticated mills sector at the other end of the spectrum. The decentralized power looms/ hosiery and knitting sector form the largest component of the textiles sector.
  • India's inflexible labor laws have been a hindrance to investments in this segment. Unlike in home textiles, garment capacities are highly fragmented and leading Indian textile companies have been slow to ramp up their apparel capacities, despite strong order flows from overseas buyers who are trying to diversify out of China.

How to Research the Textiles Sector (Key Points)

  • Supply
  • Despite some pick-up in demand from both global and domestic markets, most new capacities in the apparel and home textile segments are not operating at full capacities.
  • Demand
  • High for premium and branded products due to increasing per capita disposable income.
  • Barriers to entry
  • Superior technology, skilled and unskilled labor, distribution network, access to global customers.
  • Bargaining power of suppliers
  • Because of oversupply in the unorganized market like that of denim, suppliers have little bargaining power. However, premium products and branded players continue to garner higher margins.
  • Bargaining power of customers
  • Domestic customers - Low for premium and branded product segments. Global customers- High due to presence of alternate low cost sourcing destinations.
  • Competition
  • High. Very fragmented industry. Competition from other low cost producing nations is likely to intensify.

top ↑

Financial Year '19

  • In FY19, India's textile and apparel exports increased 1.7% to US$ 35.969 billion as compared to US$ 35.381 in FY18. Manmade garments remain the largest contributor to total textile and apparel exports from India.
  • Under Union Budget 2019-20, Government of India allocated around US$ 691.3 million for the Ministry of Textiles. Integrated Wool Development Programme has been allocated US$ 4.1 million under Union Budget 2019-20. The government has allocated US$ 2.9 million for the Scheme for Integrated Textile Parks.
  • The National Handloom Development Programme will get US$ 65.4 million and the Integrated Processing Development Scheme will get US$ 0.50 million. Khadi Express train will be run to create awareness about the Indian khadi.
  • In FY19, growth in private consumption is expected to create strong domestic demand for textiles.
  • Increased penetration of organised retail, favourable demographics, and rising income levels are likely to drive demand for textiles. Cloth production stood at 58.1 billion square metres (provisional) in FY19.
  • Exports of textiles and apparels from India reached US$ 31.7 billion in FY19. Manmade garments remain the largest contributor to total textile and apparels exports from India.

top ↑

Prospects:

  • The Ministry of Textiles is encouraging investments through increasing focus on schemes such as Technology Up-gradation Fund Scheme (TUFS). Under the Union Budget 2018-19, US$ 355.3 million crore have been allocated for TUFS and US$ 4.6 million for the Scheme for Integrated Textile Parks, under which there are 47 ongoing projects.
  • Textile and apparel exports from India are expected to increase to US$ 82 billion by 2021. The domestic textile industry in India is estimated to reach US$ 223 billion by 2021F from US$ 150 billion in November 2017, while cotton production in India is have reached 36.1 million bales in FY19.
  • India continues to be one of the fastest growing major economies in the world and is expected to be among the world’s top three economic powers in the next 10-15 years. The Indian economy is expected to improve and close the year 2019 with a GDP growth of 7.3% (Source: IMF).
  • The Ministry of Textiles announced US$ 106.6 million for setting up 21 readymade garment manufacturing units in seven states for development and modernization of Indian textile sector.
  • The textile and apparel trade is predicted to grow at a CAGR of 3.7% during the period 2018-28. During this period, the increase in apparel trade is expected to be at a CAGR of 4.5% and textiles at a CAGR of 2.5%.
  • The sector also has the capability to manufacture all categories of products and a conducive ecosystem to provide complete service offering to brands and retailers. However, the increasing labor and energy costs have mitigated the international competitive advantage of China to some extent. The global apparel manufacturers are finding Bangladesh, Vietnam and India as competitive markets over China.

top ↑

Related Links for Textiles Sector
Quarterly Results | Sector Quote | Over The Years

Views on News

GRASIM Announces Quarterly Results (3QFY20); Net Profit Down 6.2% (Quarterly Result Update)

Feb 17, 2020 | Updated on Feb 17, 2020

For the quarter ended December 2019, GRASIM has posted a net profit of Rs 10 bn (down 6.2% YoY). Sales on the other hand came in at Rs 192 bn (up 4.3% YoY). Read on for a complete analysis of GRASIM's quarterly results.

WELSPUN INDIA Announces Quarterly Results (3QFY20); Net Profit Up 49.9% (Quarterly Result Update)

Feb 17, 2020 | Updated on Feb 17, 2020

For the quarter ended December 2019, WELSPUN INDIA has posted a net profit of Rs 751 m (up 49.9% YoY). Sales on the other hand came in at Rs 17 bn (up 1.5% YoY). Read on for a complete analysis of WELSPUN INDIA's quarterly results.

SRF LTD 2018-19 Annual Report Analysis (Annual Result Update)

Oct 18, 2019 | Updated on Oct 18, 2019

Here's an analysis of the annual report of SRF LTD for 2018-19. It includes a full income statement, balance sheet and cash flow analysis of SRF LTD. Also includes updates on the valuation of SRF LTD.

WELSPUN INDIA 2018-19 Annual Report Analysis (Annual Result Update)

Sep 23, 2019 | Updated on Sep 23, 2019

Here's an analysis of the annual report of WELSPUN INDIA for 2018-19. It includes a full income statement, balance sheet and cash flow analysis of WELSPUN INDIA. Also includes updates on the valuation of WELSPUN INDIA.

More Views on News

Most Popular

Sorry Warren Buffett, I'm Following This Man Instead of You in 2020 (The 5 Minute Wrapup)

Mar 30, 2020

This man warned of an impending market correction while everyone else was celebrating the renewed optimism in early 2020...

The Biggest Trading Opportunity of 2020 is Here...

Mar 26, 2020

India's #1 trader, Vijay Bhambwani, talks about a hugely profitable trading opportunity which you must know about today!

A Big Trading Opportunity is Coming Your Way Soon (Fast Profits Daily)

Mar 25, 2020

I see a big opportunity to make fast profits on the horizon.

Coronavirus Sell-off Is a Perfect Time to 'Lockdown' this 'Crorepati' Stock (Profit Hunter)

Mar 24, 2020

Coronavirus crisis and panic selling has brought this quality smallcap to multiyear lows, making it a great bargain.

One Stock that is All Charged Up for the Post Coronavirus Rebound (The 5 Minute Wrapup)

Apr 1, 2020

A stock with strong moat is currently trading near 5-year lows.

More

How to Trade the
Coronavirus Crash

Coronavirus Crash
Get this special report, authored by Equitymaster's top analysts, now.
We will never sell or rent your email id.
Please read our Terms

COMPARE COMPANY

MARKET STATS