Home Textile Exporters to Clock 20% Growth with Healthy Margins: ICRA

Taking advantage of pandemic-related lifestyle changes Indian home textile exporters are expected to have a strong year in FY22, according to investment research company ICRA, due to improved cleanliness awareness and the predominance of stay-at-home choices.

These reasons have fueled a strong increase in demand for home improvement items over the last year, and demand is projected to continue from Q2 to Q4 FY22, following the pattern of the previous three quarters.

ICRA’s sample group of firms (comprising four big, listed operators, accounting for 35 to 40% share in India’s home textile exports) are predicted to record a solid double-digit increase of 20 to 25% in FY22.

This comes after the sample announced a sluggish 5% revenue increase in FY21, owing to a 40% year-over-year drop in performance in Q1 FY21. During the rest of the year, the sample expanded by 25%.

According to ICRA, the sample reported an 18% drop in operational revenue in Q4 FY20, and the pandemic had begun to affect major export nations.

Home textile exporters are believed to have recorded a strong rise of 15 to 20% in the nine-month period ending March, even after correcting the base for the same.

Sales for the sample set for the last three quarters averaged 25 to 40% higher than the three-year average for the pre-Covid period, according to Ms. Pavethra Ponniah, Senior Vice President and Co-Group Head of Corporate Sector Ratings at ICRA.

“One of the first few textile categories to recover from the impact of the pandemic last fiscal was home textile exports, with firms reverting to year-on-year growth as early as Q2 FY21 and reporting three consecutive quarters of double-digit growth thereafter,” she added.

The greatest market, the United States, has fueled export demand, accounting for 60% of India’s domestic textile exports.

Exports to the US grew by 14% in FY21, compared to a 9% growth in India’s home textile product exports of US$ 5.7 billion in FY21. Exports to the other main markets of the United Kingdom and the European Union declined.

Apart from the faster opening up, the rise in shipments to the US is partially due to the distribution strategy for these items, with a significant percentage accounted for by the big departmental chains that stayed open even throughout the lockdown phase.

Furthermore, the solid order book position of Indian home textile exporters reflects predictions of high holiday demand this year, underpinned by favourable vaccine coverage across major markets.

According to ICRA’s channel inspections, the bigger exporters have a healthy order backlog and are more likely to rely on job work and outsourcing to meet delivery obligations in the coming quarters.