Textile stocks show sunnier outlook

The fall in cotton prices has been a trigger

Textile companies are expected to see happier days ahead and reflecting this sentiment, their share prices have begun to shine, owing to a fall in cotton prices coupled with strong export demand.

Alok Industries’ stock has moved up 11 per cent and those of Arvind Mills by eight per cent since April 1. The biggest gainer is Tuni Textiles Mills, up 62 per cent.
 

BETTER RETURNS
BSE price in Rs	1-Apr-11	20-Apr-11	%chg
Tuni Textile Mills	28.46	48.00	68.66
Jaybharat Textiles	110.00	183.70	67.00
Shri Lakshmi Cotsyn	79.65	107.80	35.34
Winsome Yarns	2.65	3.50	32.08
Welspun India	43.30	55.40	27.94
Lovable Lingerie	246.05	305.20	24.04
S Kumars Nationwide	57.25	65.34	14.13
Alok Ind	22.70	25.75	13.44
Delta Corp	85.80	96.45	12.41
Arvind Ltd	67.84	73.55	8.42
SRF	322.35	347.50	7.80
Vardhman Textiles	271.80	290.50	6.88
Bombay Rayon Fashions	271.55	286.80	5.62
JBF Ind	165.50	174.05	5.17
Data compiled by BS Research Bureau

The fall in cotton prices has been a trigger, as is the ability to pass on the burden of rising input cost to consumers. Cotton prices were Rs 63,000 a candy (356 kg) on the spot markets a fortnight before and are now Rs 55,500 a candy.

CARE, the country’s second largest rating agency, has upgraded the rating of 32 textile companies (it has downgraded four). They are expected to grow well in the coming months on the back of strong export demand, said an official.

Also, in the past month, Rs.2,000 crore has been allotted under the Technology Upgradation Fund Scheme. The scheme had offered a 10 per cent capital subsidy for processing and garment machines; weaving looms are also covered now, said an industry official.

“Another reason for the Indian textile industry to do better is because China’s domestic demand has increased and their imports of textiles have gone up,” said, Sunil Khandelwal, chief financial officer of Alok Industries.

An official said yarn spinning mills are doing better then other players in the industry.