India’s textile sector could be heading for a strong growth phase.
Global companies are looking to reduce their dependence on China. This shift is known as the China+1 strategy.
India could benefit from this change. New trade deals may also make Indian exports more competitive.
Against this backdrop, Jefferies has initiated coverage of Welspun Living and Raymond Lifestyle.
The brokerage has given both stocks a ‘Buy’ rating.
Jefferies has set a target price of Rs 260 for Welspun Living. It has set a target of Rs 900 for Raymond Lifestyle.
Welspun Living Gets Rs 260 Target
Jefferies sees Welspun Living as a strong play on India’s home-textile exports.
The company has a large global business. It also has an integrated supply chain.
Its strong ties with global customers are another key advantage.
Jefferies expects Welspun Living’s revenue to grow at a 14% CAGR from FY26 to FY29E.
The brokerage expects even faster growth in profits.
EBITDA could grow at a 38% CAGR during this period. Profit after tax could rise at a 71% CAGR.
Jefferies also expects the company’s ROCE to reach nearly 19%.
Raymond Lifestyle Seen as Value Opportunity
Jefferies has also started coverage of Raymond Lifestyle with a ‘Buy’ rating.
The brokerage has set a Rs 900 target price.
Raymond Lifestyle has a strong position in branded textiles. It also has a wide distribution network.
Its garmenting business is another growth driver.
However, the company has faced weak demand in recent quarters. It has also faced some execution issues.
Jefferies expects a recovery as management changes take effect.
The brokerage sees three major growth drivers. These are premiumisation, an apparel recovery and export-led garmenting.
Jefferies expects Raymond Lifestyle’s EPS to grow at a 23% CAGR between FY26 and FY29E.
The stock also looks attractive on valuation, according to the brokerage.
Why Jefferies Likes India’s Textile Sector
The global textile and apparel market is worth more than $900 billion.
India has several advantages in this market.
The country has a large textile ecosystem. It also has access to raw materials and a skilled workforce.
In addition, government support could help the sector grow.
Global supply chains are also changing.
Many companies now want more suppliers outside China. This could create new opportunities for Indian exporters.
Jefferies expects this trend to continue for several years.
UK and EU Trade Deals Could Help
Trade agreements could give Indian textile companies another boost.
The India-UK trade agreement is expected to improve market access for Indian exporters.
Jefferies expects textile tariffs in the UK to fall sharply under the agreement.
A possible India-EU trade deal could provide another major opportunity.
The UK and EU together represent a large textile and apparel market.
Lower tariffs could make Indian products more competitive.
India could also benefit as Bangladesh gradually loses some of its trade advantages linked to its Least Developed Country status.
Home Textiles Give India an Edge
Home textiles are already a strong export category for India.
Indian companies have built long-term relationships with global retailers.
The sector also faces high entry barriers. It has lower fashion risk than many apparel categories.
India has a strong position in the US home-textile market.
However, its share in the UK and Europe is still lower.
This leaves room for further growth.
Jefferies believes Welspun Living is well placed to benefit from this opportunity.
Apparel Could Be the Bigger Opportunity
Home textiles offer India an existing advantage.
However, apparel could become an even bigger opportunity over time.
China+1 sourcing could support Indian apparel exports.
Lower tariffs could provide another boost.
Higher compliance standards may also encourage global brands to diversify their supplier base.
For Raymond Lifestyle, this could support growth in both apparel and garment exports.
What Investors Should Watch
Investors should watch a few key factors.
For Welspun Living, export growth will be important. Investors should also track margins and global market share.
For Raymond Lifestyle, the focus will be on the apparel recovery. Premiumisation and garment exports will also be important.
Overall, Jefferies sees two different opportunities.
Welspun Living is a play on India’s growing home-textile exports.
Raymond Lifestyle offers a value and turnaround opportunity.
Both stocks could benefit if India gains a larger share of global textile and apparel trade.
