Strong domestic and export demand to improve YoY sales volumes of the textile sector in FY22: Ind-Ra

Strong domestic as well as export demand will improve year-on-year sales volumes of the entire textile industry in FY22, said India Ratings and Research (Ind-Ra).

According to the agency, domestic demand as well as export demand will be maintained for the remainder of fiscal year 22.

In addition, he maintained the outlook for the sector to be rated “Stable” for the remainder of FY22, expecting a sustained improvement in the profitability of players in the sector and continued deleveraging on their balance sheets.

“The strong operating cash flow will lead to an improvement in their credit parameters, despite the likely increase in working capital requirement due to higher sales volumes and increased capital spending. “

“The benefits of integrated business operations, healthy balance sheet liquidity and operational efficiency in FY22 have already been factored into the ratings. “

According to the agency, domestic demand improved during “2HFY21” before declining slightly during “1QFY22”, due to the closure of shopping centers and commercial spaces in cities.

“Demand is likely to improve from ‘2HFY22’ with the easing of restrictions but remains vulnerable to any further restrictions. Additionally, demand from the spinners appears to be picking up ahead of the festivities in India.”

“During ‘1QFY22’, players witnessed an increase in year-over-year volumes, although they decreased slightly in QoQ.”

As a result, segments such as cotton yarns and fabrics experienced higher year-on-year demand from downstream players during “1HFY22”.

“Domestic demand for home textiles has held up, while that for fabrics and clothing is likely to improve with the opening of retail stores and malls starting from ‘2HFY22’.”

In addition, the agency expects export demand to improve moderately in 2HFY22 thanks to accelerated vaccination and the “China Plus One” sourcing strategy.

“Demand is likely to improve further from FY 23. In addition, the continued impact of China’s (Xinjiang) cotton supply restriction could play an important role in stimulating demand. . “

Posted on: Saturday, November 27, 2021, 3:55 p.m. IST

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