The stocks of Indian textile companies have performed well in the last one year. Of the 52 textile stocks, 43 have fetched positive Return on Investment (ROI) despite Indian textiles going through a lean phase since the last few years and the government’s measures have done little to help the industry’s cause.
The list of woes is also a long one – falling exports of cotton yarn and apparel, growing competition from China, negative impact of global economic slowdown, mounting inventories, lack of capital infusion for technology upgradation and volatile stock markets among others.
The current Chinese economic slowdown is a fresh phenomenon, but the Indian textile industry, mainly cotton yarn producers and apparel exporters, are on tenterhooks since long on account of escalating raw material prices and falling overseas demand.
But shares of Blue Blends (India) generated a hefty return of 585.20 per cent in last one year. The small cap stock spurted to Rs. 80.10 as on January 15, 2015 from Rs. 11.69 a year ago. At current market price (CMP) of Rs. 153.80, shares of Spenta International have given a 339.42 per cent return. Similarly, Premco Global has skyrocketed 305.86 per cent to Rs. 765.25 from Rs. 188.55 as on January 15, 2015.
What’s even more significant is the fact that these ROIs have outperformed benchmark indices big time. In last one year, the S&P BSE Sensex and Nifty 50 have tanked by over 12 per cent, while the BSE Small cap Index, too, has plunged 4.69 per cent.
The yuan depreciation is alarming for Indian textile value chain as China accounts for 40 per cent of India’s total exports of cotton yarn. Sinking yuan may result into oversupply of cotton yarn in domestic market. The Chinese currency has fallen nearly 5.6 per cent since August 2015, whiles the Indian rupee too, has slumped 4.5 per cent against the US dollar in the same period.
