High prices, low demand to weigh on textile sector

Overhang for the industry is unlikely to diminish in the near term; analysts remain hopeful of recovery from H2FY24

- LOVISHA DARAD

Shares of textile firms like Welspun India and Bombay Dyeing, and those manufacturing innerwear, such as Page Industries, Lux Industries, and VIP Clothing, have exhibited mixed performance so far this calendar year (CY23), amid higher domestic cotton prices and tepid global demand.

Shares of Welspun India and Bombay Dyeing, for instance, have gained up to 40 per cent in CY23, while Page Industries, Lux Industries, and VIP Clothing have declined up to 13 per cent. In comparison, the benchmark S&P BSE Sensex has surged 8.7 per cent, during the same period.

With domestic cotton prices on the higher end as compared to global markets, analysts believe that the disparity is affecting India's global competitiveness in the near term.

VK Vijayakumar, Chief Investment Strategist of Geojit Financial Services said that textile exporters like Bangladesh, Vietnam, and Cambodia have been benefiting from lofty cotton prices in India due to lower custom duty in their countries. The consequent higher prices rendered Indian exports uncompetitive, thereby hurting the domestic industry, he added.