The industry is witnessing buoyant demand of cotton yarn from export markets and diversion of garmenting orders from Bangladesh due to labour unrest and safety issues. Moreover, weaker rupees YoY helped Indian exporters further on global competitive scale. During Apr-Jan FY14 period, textile exports grew 14.6 per cent YoY to $28.5 billion. Vardhman Textiles (yarn & fabric), Arvind (fabric & garments) and Raymond (fabric & garments) are expected to fare well on exports front.
Cotton based manufacturers witnessed moderate margin pressure due to higher cotton prices, while synthetic fibre prices are stabilising. Worsted fabric is looking positive with ~10 per cent YoY decline in imported wool prices, coupled with strengthening of Rupee. Companies with exposure to exports are expected to gain on buoyant demand while domestic demand is subdued on seasonality. March and June quarters are usually leaner for domestic market
Moreover, apparel players, which enjoyed incremental revenue growth (~5-7 per cent) along with margin expansion during FY14E due to removal of excise duty, are not going to get additional impetus.