In a sluggish market on Tuesday, shares of textile & apparel manufacturers shot higher on hopes that the unrest in Bangladesh, a significant textile exporter, would help the Indian sector. The benefits, according to analysts, might not last long because it’s yet unclear whether domestic businesses will profit from the instability in the neighboring nation. Gokaldas Exports, KPR Mill, and SP Apparels all had gains of 15% & 20% on Tuesday. The BSE 500 index fell by 0.4%.
Bangladesh’s Textile Industry To Soon Relocate To India
“Though textile stocks have advanced, we don’t expect any short-term advantage to these companies owing to the political turmoil in Bangladesh, since we believe retailers and brands will wait & watch for the following two weeks to check the situation,” Prerna Jhunjhunwala, vice president of Elara Capital. She suggested that if conflicts continue, Indian businesses might receive more orders in the upcoming six months or throughout the upcoming season.
“In the shorter run, spinning & fabric supply firms who export to Bangladesh can see certain fluctuations in their order manuals,” she stated. Industry insiders stated that drawing the premature conclusion that Bangladesh’s textile industry would soon relocate to India would be premature. Rahul Mehta, chief mentor of the Clothing Manufacturers Association of India (CMAI), questioned if the Indian textile industry could match the productivity of the Bangladesh market due to its lack of personnel, raw material inventories, and manufacturing capacity.
Too Soon To Draw Conclusions
There aren’t many factories in our country that can handle mass production. Therefore, it is too soon to draw firm conclusions on potential profits or losses for the Indian markets.” Compared to the 15% profits in the benchmark BSE 500, the shares of clothing and textile firms have returned between 4% and 56% so far in 2024. According to T Manish, a research analyst at SAMCO Securities, “the Indian government’s efforts to support the textile industry paired with current circumstances in Bangladesh could help the sector.”
Gokaldas Exports, KPR Mills, as well as the Trident Group are a few of Samco’s best recommendations for the sector’s stocks, with potential gains of 10% to 15%. Arvind, KPR Mills, Gokaldas Exports, and SP Apparels could benefit, according to Jhunjhunwala. The speaker stated, “The visibility of orders may lead to additions to capacity in the medium term, since raw materials sourcing wouldn’t pose a challenge, even though Indian companies may not have the capacity to take additional orders right now.”
