Indian Home Textile Sector - Taking ‘Home’ To The World: Systematix Initiates Coverage On The Sector

Systematix Research Report

India’s home textiles industry plays a key role in global markets, supported by a strong raw material base, wide product offerings and robust manufacturing capabilities across the chain. Domestic home textile companies are shedding the burden of legacy high-volume product categories such as plain cotton bedsheets/terry towels and realigning their business models to tune into new high-growth profitable and scalable trends.

Ministry of Textiles estimates India’s home textiles market at $10 billion for FY24, poised to post ~7% compound annual growth rate over FY24-FY31 at $16 billion. Factors driving this growth are-

• competitive manufacturing costs and organized retail landscape and ecommerce,

• presence of entire chains and a large and growing domestic market,

• increasing focus on technical textiles due to growth of end-user industries,

• rising per capita income and an expanding real estate industry.

We expect the sector profitability to improve, spurred by improving demand and moderating working capital. This will likely aid cash flows and make return on equity/return on capital employed attractive.

We initiate coverage on the sector with a positive view, and Welspun Living Ltd. is our top pick.

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