Tariffs leave textile cos hanging by a thread, prompt US pivot

Potential casualties Textile companies with high exposure to the US would bear the brunt of elevated tariff.

- Harsha Jethmalani

The spectre of steep US tariffs has hammered Indian textile stocks over the past month. Until 26 August, shares of Trident Ltd, Arvind Ltd, Welspun Living Ltd, and Indo Count Industries Ltd had shed 10-15%, while smaller peers such as Himatsingka Seide Ltd, Kitex Garments Ltd and Faze Three Ltd suffered even deeper corrections. Those fears crystallized on 27 August, when Washington issued a draft notice to impose 50% tariffs on Indian imports.

For companies with large exposure to the US, the move threatens volumes, margins and, ultimately, earnings downgrades unless a trade deal is reached.

"Retailers were comfortable with 25% tariffs imposed earlier (~5% disadvantage) which could have been absorbed through negotiations, cost optimization programs, and incentives. But we believe exporters will not be able to bear the impact of the additional 25% US tariff," said an Antique Stock Broking Ltd report on 28 August.

Antique has cut FY26/FY27 and FY28 earnings estimates for Arvind Ltd by 13%/17%/10% respectively and for Welspun by 15% for each year.