Textiles shares continue to swing upwards

The revival in the fortunes of the textile sector, which began early this year, is continuing.

The stock prices of cotton textiles and ready made garments firms have specifically been on a gradual northward move.

Despite a boom in cotton production, rising cotton prices coupled with the a slew of government measures sent the stock prices of textile companies sky rocketing and became the third most favourite sector next only to pharmaceuticals and banking stocks.

Global buyers with sourcing deals added fuel to fire for textile demand and investors lapped up the stocks with a vengeance.

Global retail chain majors like Wal Mart and The Gap lined up to source their requirements from India.

Their indication to set up offices in the country foretells a trend that could follow even after the multi-fibre agreement expires on January 01, 2005.

The stock price of Bombay Dyeing has gained from Rs 84.65 on October 1 to today's close of Rs 149.85, up 77.02 per cent.

During the same period Bhilwara Spinning increased from Rs 4.25 to Rs 7.85, up 84.70 per cent, GTN Textiles moved up from Rs 32.50 to Rs 52.00, up 60 per cent, Ashima Syntex shot up from Rs 16.85 to Rs 25.05, up 48.66 per cent, Hindoostan Spinning gained from Rs 11.89 to Rs 23.20, up 95.12 per cent, Lakshmi Mills increased from Rs 233.90 to Rs 424.00, up 81.27 per cent, Zodiac Clothing shot up from Rs 117.00 to Rs 308.50, up 163.67 per cent, Maral Overseas increased from Rs 13.90 to Rs 32.35, up 132.73 per cent, Mafatlal Industries shot up from Rs 17.95 to Rs 29.85, up 66.29 per cent, Vardhman Polyester gained from Rs 46.85 to Rs 71.40, up 52.40 per cent, Mahavir Spinning increased from Rs 86.30 to Rs 175.85, up 103.76 per cent, Arvind Mills shot up from Rs 48.15 to Rs 66.35, up 37.79 per cent and Pantaloon Retail jumped from Rs 164.00 to Rs 268.20, up 63.53 per cent.

Industry analysts expect that world trade in textiles will surge Exponentially post the quota era, as India's labor cost advantage will result in a disproportionate market share gain for Indian exports.

Taking the advantage of the sops showered by the government, the sector which contributes about 8.0 per cent to nation's gross domestic product, 17 per cent to industrial production and accounts for 30 per cent of total exports is charged up with many players going for fresh expansions or streamlining of businesses.

The government's new textile policy has set a target of textile and apparel exports of $50 billion by 2010 from the present level of $12 billion of which the share of garments will be $25 billion (at present $6.20 billion).

The growth potential of the industry is also evident from the expected growth of the Global Textile Trade, which is estimated to increase from $400 billion to $700 billion by the year 2010.

Currently, India is focused more on low value fabric exports than high value apparel/clothing exports partly due to quota restrictions and party due to past government policies.