Indian Textiles - Better Volumes, Soft Raw Material Prices Drive Profitability; Outlook Positive: Systematix

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Systematix Research Report.Textile companies reported healthy all-round performance in Q1 FY25, posted 18%/32%/41% YoY growth in revenue/Ebitda/profit after tax, respectively. Higher volumes and benign raw material prices drove this growth. Topline growth was healthy on double-digit volume growth, despite muted realisations. Soft cotton (down 4% YoY and 1% QoQ) and stable yarn prices aided the expansion in spinners’ gross margins. However, domestic cotton prices turned expensive to Rs 58,000- 60,000/candy as the harvesting season ended and as MSP rose to 7%, rendering the Indian industry uncompetitive in the global arena (international cotton prices fell to 54,000-55,000/candy). Garment sales volumes improved 11% YoY in Q1 FY25 as global retailers witnessed demand recovery, considering a large part of the inventory liquidated. Home textile companies too continued to see healthy volumes in Q1 FY25 (up 16% YoY and 6% QoQ). We expect the demand momentum to improve in H2 FY25 and volume growth to gradually outpace inventory on easing inflation, normalised channel inventory, improving supply chain trends and expected cuts in interest rates. Aggregate revenue of the four textile companies under our coverage increased by 14% YoY but fell 2% QoQ, broadly in line with our estimate. Our coverage companies witnessed 205 bps YoY and 110 bps QoQ margin expansion, with aggregate Ebitda margin of 15% being driven by benign raw material costs and change in product mix. Aggregate Ebitda increased 33% YoY and 6% QoQ, while adjusted profit after tax increased 57% YoY and 8% QoQ, largely contributed by 75% YoY growth in Vardhman Textiles’ PAT. We raise earnings estimates for Vardhman Textiles, Welpsun and Gokaldas Exports on improving volume trends and stable realisations..Click on the attachment to read the full report:.Federal Bank - Going From Strength To Strength: Axis Securities.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Indian Textiles - Better Volumes, Soft Raw Material Prices Drive Profitability; Outlook Positive: Systematix

The brokerage expects the demand momentum to improve in H2 and volume growth to gradually outpace inventory on easing inflation, normalised channel inventory etc.

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Indian Textiles - Better Volumes, Soft Raw Material Prices Drive Profitability; Outlook Positive: Systematix

The brokerage expects the demand momentum to improve in H2 and volume growth to gradually outpace inventory on easing inflation, normalised channel inventory etc.

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