Home textile exporters to clock 20-25% growth in FY22: Report

Home textile exporters are set to clock a 20-25 per cent growth in 2021-22 with healthy margins, according to a report.

The pandemic-induced lifestyle changes stemming from heightened consciousness about hygiene and increased prevalence of stay-at-home options are likely to result in a robust performance for Indian home textile exporters, Icra said in the report on Tuesday.

Home textile exporters are set to register 20-25 per cent growth during FY22 with healthy margins, it added.

For the past three quarters, sales for the sample set have averaged 25-40 per cent higher than the 3-year average for the pre-COVID period.

Home textile exports was one of the first few textile segments to recover from the impact of the pandemic last fiscal, with companies reverting to year-on-year growth from the second quarter of FY21 itself and reporting three consecutive quarters of double-digit growth thereafter," Icra Senior Vice President and Co-Group Head, Corporate Sector Ratings, Pavethra Ponniah said.

The export demand has been mainly driven by the US, the largest market, accounting for 60 per cent of India's home textile exports, she noted.

"Compared to a 9 per cent increase in India's home textile product exports of USD 5.7 billion in FY21, exports to the US increased by 14 per cent, while exports to the other major markets of the UK and the EU reported a y-o-y decline during the year.

Besides faster opening up, increase in exports to the US is partly attributable to the distribution model for these products, with a meaningful share accounted for by the large departmental chains that remained open even during the lockdown phase, Ponniah added.

Moreover, expectations of a strong festive demand this year, backed by favourable vaccination coverage across key markets are reflected in the healthy order book position of Indian home textile exporters, the report said.

Icra said the larger exporters have a robust order backlog and are likely to rely more on job-work or outsourcing to fulfil delivery commitments over the next few quarters.

Improved economies and softer input costs helped the companies report an improvement in operating margins in FY21, it noted.

However, cost pressures have intensified with expectations of a healthy sales turnover as cotton yarn, a key raw material for manufacturing made-ups, has been trading at nearly 40-50 per cent higher compared to last year levels.

Nevertheless, the rating agency expects operating efficiencies and re-negotiation of product prices amid sustained cost pressures to help companies maintain their profitability at robust levels.

Going forward, while the opening up of economies will lead to some moderation in demand with increased household budgets allocated to alternate discretionary uses, such as travel and dining out, greater prevalence of work-from-home vis-a-vis pre-COVID times is likely to sustain demand for home textile products.

Further, higher occupancy in the hospitality sector is expected to support recovery in institutional demand, which has remained muted in the recent quarters, Icra Vice President and Sector Head, Corporate Sector Ratings, Nidhi Marwaha said.