Home textile exporters to clock 20 pc growth with healthy margins: ICRA

New Delhi [India], August 18 : Riding high on pandemic-induced lifestyle changes stemming from heightened consciousness about hygiene and increased prevalence of stay-at-home options, Indian home textile exporters are set to register robust performance during FY2022, investment information firm ICRA has said.
These factors have driven a sharp surge in demand for home improvement products over the past one year, and the demand momentum is expected to sustain during Q2 to Q4 FY2022, continuing on the trend of the past three quarters.
ICRA's sample set of companies (comprising four large, listed players, accounting for 35 to 40 per cent share in India's home textile exports) are projected to clock a robust double-digit growth of 20 to 25 per cent in FY2022.
This follows a subdued 5 per cent growth in revenues reported by the sample in FY2021, primarily due to 40 per cent year-on-year dent in performance in Q1 FY2021. The sample grew by 25 per cent during rest of the year.
ICRA said the sample had reported 18 per cent decline in operating income in Q4 FY2020 as well as the pandemic had started affecting the key countries of export.
However, even after adjusting the base for the same, home textile exporters are estimated to have reported a healthy growth of 15 to 20 per cent in the nine-month period ended March.
Pavethra Ponniah, Senior Vice President and Co-Group Head of Corporate Sector Ratings at ICRA, said sales for the sample set for the past three quarters averaged 25 to 40 per cent higher than the three-year average for the pre-Covid period.
"Home textile exports was one of the first few textile segments to recover from the impact of pandemic last fiscal with companies reverting to year-on-year growth from Q2 FY2021 itself and reporting three consecutive quarters of double-digit growth thereafter," she said.
The export demand has been mainly driven by the United States, the largest market, accounting for 60 per cent of India's home textile exports.
Compared to a 9 per cent increase in India's home textile product exports of 5.7 billion dollars in FY2021, exports to the US increased by 14 per cent while exports to the other major markets of the United Kingdom and the European Union reported a decline.
Besides faster opening up, increase in exports to the United States is partly attributable to the distribution model for these products with a meaningful share accounted for by the large departmental chains that remained open even during the lockdown phase.
Moreover, expectations of a strong festive demand this year backed by favourable vaccination coverage across key markets is reflected in the healthy order book position of Indian home textile exporters.
ICRA's channel checks suggest that the larger exporters have robust order backlog and are likely to rely more on job-work and outsourcing to fulfil delivery commitments over the next few quarters.