Strong Rupee To Hit Textile

Strong Rupee To Hit Textile

Earnings and Ebitda margins of textile and apparel exporters will be hit in the near term following rupee’s appreciation against the dollar in 2017 and weak apparel import from additional markets like the US and the UK, India Rating and Research has said.

A stronger rupee is likely to have an adverse impact on export trade volume and earning since fresh orders will have reduce competitiveness, the agency said.

The rating agency estimates that realization will shrink by three to five per cent in the near terms and impact profitability of companies across the textile value chain. It expects the Ebitda margin erosion of around 150 basis points year-on-year in the fourth quarter ended March 2017.

It believes this May offset some of the gains which will accrue from government’s export stimulus package and GST implementation.

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