Textile shares decline as markets boom

In spite of the sustained bull run in the stock market, the shares of textile companies have declined by an average 32 per cent over the last 10 months.

The stocks that have lost the most include Ginni Filaments, Nahar Industries, Raymond, Vardhaman and Welspun India. The decline in textile stocks can be largely attributed to the recent rupee appreciation and high raw material costs.

The rupee has appreciated by 15 per cent to the US dollar in the last one year. The Bombay Stock Exchange's 30-share Sensex moved up by 35 per cent to 18,900 points in the first week of November, as compared with 14,000 points in January 2007.

The shares of Super Spinning have declined by 44 per cent to Rs 15.22, Vardhaman Textiles fell 46 per cent to Rs 134.90 and Sutlej Textiles lost 45.6 per cent to Rs 122.50. However, the decline does not extend to all textile companies. 
 

NOT IN VOGUE                           Share price in Rs
Losers	Jan 31, 2007	Nov 12, 2007	% change
Vardhman Textiles	251.65	134.90	-46.39
Sutlej Textiles	225.10	122.50	-45.58
Super Spinning	27.20	15.22	-44.04
Nahar Inds	163.00	92.95	-42.98
Ginni Filaments	18.95	11.67	-38.42
Gainers
S. Kumars Nation	72.09	134.40	86.43
Zodiac Clothing	276.00	455.00	64.86
Grasim Industries	2778.55	3548.25	27.70
Lakshmi Mills	1889.00	2383.05	26.15
Aditya Birla Nuvo	1262.00	1497.80	18.68

The shares of S Kumars Nationwide and Zodiac Clothing moved up by 86 per cent and 65 per cent to Rs 134.40 and Rs 455 respectively as of November 12. Analysts said even the recent announcement of Technology Upgradation Fund Scheme and other sops from the Central Government may not provide immediate succour to export-oriented textile companies.

Further, a slowdown in the United States economy has slowed down exports, adding to the problems.

Commenting on its declining share prices, Nahar vice chairman and managing director Kamal Oswal said, "A strong rupee and increased supply in the domestic market has depressed realisations and squeezed margins. To counter this, we have taken initiatives such as improving production efficiency and undertaking capex projects for profitability enhancement".

Nahar Industries declined by 43 per cent to Rs 92.95 on November 12. High demand for cotton in the international market has hit the procurement plans of companies.

The rising prices of cotton have hit the low margin, fabric exports segment. Some companies are thus laying off employees or shutting some sections.