According to a CRISIL Ratings survey of 40 businesses, India’s Home textile industry is expected to increase by 6–8% this fiscal year after seeing a 9–10% recovery in revenue growth the previous fiscal year.
Between 40 and 45 percent of the industry’s revenue comes from these businesses. This kind of growth is expected to be supported by both domestic market expansion and strong US demand. According to the analysis, home textile companies’ credit profiles will be steady due to their sound cash accrual and moderate capital expenditure (capex) plans, which are backed by deleveraged balance sheets.
About 70–75% of the home textile industry’s income comes from exports, of which 60% come from the US alone. The remaining 25–30% comes from the domestic market.
According to Gautam Shahi, Director of CRISIL Ratings, the European Union (EU) accounts for 15–16% of the industry’s import share outside of the US. Given the regional economic climate and the EU’s favorable trade tariffs for exports from Pakistan, this market may experience subdued growth in the current fiscal year. The remaining 25–30% of the industry’s total revenue comes from the domestic Indian market. The majority of the Indian home textiles business is unorganized, and the organized firms are constantly trying to increase their market share in India, he claims.
Between June and September 2024, a spike in cotton supply from the US and Brazil caused international cotton prices to drop below local levels. But once India’s cotton season gets underway, it is anticipated that the difference between domestic and foreign cotton prices would close, preserving India’s export competitiveness.
This fiscal year, the operating margin is probably going to stay steady at 14–15% since domestic raw material prices are still comparable to global pricing. The margin will not be affected by the recent fluctuations in freight costs because the majority of exports are free-on-board.
According to Shahi, terry towels (17–18%), carpets (30–32%), and furnishing items and bed linens (38–40%) were among the main categories of home textile products shipped from India in FY24. These items collectively accounted for 85–90% of home textile exports (in value terms). The carpet segment has experienced the biggest YoY value growth (14%), compared to lesser growth in the other categories, throughout the first five months of fiscal 2025 (April to August 2024). According to him, the other categories—curtains, ropes, etc.—are rather small and won’t have a significant impact on the growth of home textiles as a whole.
During the 2019–2024 fiscal years, home textile industries invested Rs 8,500 crore in capital expenditures to increase capacity. It is anticipated that the industry’s capacity utilization will stay between 60 and 70 percent this fiscal year as revenues gradually increase.
According to Pranav Shandil, Associate Director at CRISIL Ratings, home textile companies’ interest coverage should stay constant at 5–6 times in fiscal year 2025 if they maintain consistent operating performance and reasonable capital expenditures. The overall outside liabilities to tangible net worth ratio will remain low at 0.6–0.7 times this fiscal year, he says, because healthy cash accrual is projected to lessen reliance on external debt for working capital.
This being stated, any notable slowdown in the United States or an increase in domestic cotton prices relative to global prices would be monitored.
