Arvind, KPR Mill, Gokaldas: Textile stocks that can gain up to 12%

Major textile stocks are witnessing sideways to breakout formations, this may see stronger interest of market participants.

Textile stocks, in the past one year, have witnessed a significant re-rating with readymade garment exporters (RMG) stocks like KPR Mills and Gokaldas Exports (GEL) rallying around 6x.

According to analysts at ICICI Securities, a material improvement in financial performance (RoCE for KPR improved 440 bps to around 24% in FY21), deleveraging of balance-sheet and robust order book for the companies have been key triggers for the re-rating.

"Apparel exporters, in the past couple of quarters, have witnessed strong customer interest owing to many large global retailers diversifying their sourcing and reducing dependence on China. Overall order booking from India has increased rapidly due to the China+1 strategy of global retailers. Indian apparel players are exploring opportunities to expand their garmenting capacities to capitalise on long term growth opportunities," they said in a recent note.

Here are a few stocks from the sector that look good on the charts.

Arvind Limited (ARVIND)
Likely target: Rs 140
Upside potential: 12%

On the weekly chart, the formation of the “Golden Cross” reflects a strong bullishness. The underneath strength is currently testing the support of significant moving averages like the 50-day moving average (DMA) and 100-DMA. Although, the stock trades below Rs 124.50 level, which is its 50-DMA, the selling pressure was unable to dismantle the 100-DMA placed at Rs 111 levels. Henceforth, any move above Rs 125 may see huge breakout towards Rs 140 levels.  CLICK HERE FOR THE CHART

 
K.P.R. Mill Ltd (KPRMILL)
Likely target: Rs 700 and Rs 730
Upside potential: 5% to 9%

The shares of K.P.R. Mill have jumped three-fold in the last one year and continue to draw bullish attention from market participants. The overall formation of “Rising channel” pattern holds the upward trend intact and hints at a rally towards Rs 700 and Rs 730 levels, as shown on the weekly chart. The immediate support comes at Rs 630 and Rs 610 levels. CLICK HERE FOR THE CHART
 
Gokaldas Exports Ltd (GOKEX)
Likely target: Rs 380
Upside potential: 11%

Since May 2021, the stock has seen a pattern that displays upside move after sideways consolidation. This slow and steady momentum is witnessing buying and accumulation at the respective levels. The bigger trend has a support of Rs 300 and as long as this mark is upheld, the positive bias may lead the stock in the direction of Rs 380 levels, according to the daily chart. CLICK HERE FOR THE CHART

Aditya Birla Fashion and Retail Limited (ABFRL)
Likely target: Rs 290
Upside potential: 7%

The recent weakness has seen the stock entering a sideways momentum. The strength has gradually diminished, however the positive bias is still intact. Until the crucial support of Rs 250 does not get violated deeply, the reversal and bullishness may rejuvenate the uptrend. The immediate hurdle comes at Rs 290 and up on conquering this obstacle, the stock may succeed in rallying towards Rs 310. CLICK HERE FOR THE CHART
 
Welspun India Limited (WELSPUNIND)
Likely target: Rs 161
Upside potential: 11%

The shares of Welspun India Limited are attempting to breakout of the “Inverse head and shoulder” pattern. This move may result in an upside towards Rs 161, which is its next hurdle mark. The immediate support comes at the Rs 140 and Rs 135 levels, as indicated by the daily chart. The Moving Average Convergence Divergence (MACD) managed to cross the zero line upward, signalling a positive direction with momentum supportive of the bullish bias. CLICK HERE FOR THE CHART