Promoters of textile firms increase stake on demand recovery expectations

The promoters of several textile companies have increased their stake in the last nine months by purchasing fresh shares in the open market on expectations of a recovery in demand, and thus better profit margins.
 
The promoters of Raymond have increased their stake by 290 basis points (bps) to 46.7 per cent between April and December 2019. Similarly, the promoters of Arvind have raised their stake by 165 basis points in the same period. Indo Rama Synthetics, which has a low market capitalisation, has witnessed its promoters increasing their stake by over 18 percentage points.
 
Other players, such as Filatex India and Trident, too, have raised their stake since April 2019.

“We have recently completed an expansion at our Dahej plant and we will commence commercial operations of additional drawn textured yarn capacity plant by April 2020. There is an increasing demand for polyester yarn in both domestic and international markets, which prompted us to buy additional shares,” said Madhu Sudhan Bhageria, chairman & managing director, Filatex India.
 
India has become competitive in both polyester yarn and fabric businesses in the last couple of quarters. This has prompted leading companies in the sector — Arvind and Filatex — to expand their fabric and polyester yarn capacities, respectively.
 
“The overall sentiment is currently weak because of the global economic slowdown. But we are expecting the sentiment to recover in the next one or two quarters, and domestic textile
consumption and exports to go up. The government is providing all possible avenues for the industry to take advantage of China’s decline in the global textile export market share,” said an analyst.
 
An increase in shareholding of promoters is considered positive as it sends out an affirmative message that they see value in their companies at the current levels and are optimistic about the long-term prospects.