Textiles Sector – Strong Revival on the cards

In sync with the economic revival, India's textile sector, including exports, has shown an improved performance during the April-November period of the current fiscal. The textiles ministry has fixed a growth target of 12 per cent to reach a market size of USD 115 billion in the next five years and a global trade share of 7 per cent.

Many export-oriented as well as domestic units of textile companies are doing well. Further many companies in the sector have used slowdown to expand their manufacturing capacities. Textile companies, being export-oriented, enjoy many tax and other fiscal sops. Apart from this many textile players have huge land banks and non - operational production units which provide significant value to the companies. Due to the global slowdown and poor sentiments, many well managed companies have become very attractively valued where market capitalization is less than the land value. Many integrated textile companies which possess competitive strength, high quality products and operational efficiencies are quoting very attractive just because of poor sentiments in the sector.

We believe the current market scenario seems to be right for such companies. The present government is very keen on reviving this industry as it is labour intensive and helps fulfilled its promise of generating useful employment opportunity for every able citizen. Hence, you can expect fiscal sops to this industry to continue and get further enhanced in the forthcoming budget. So, we recommend buying stocks like Vardhman Textiles, Alok Industries, S Kumars Nationwide, Page Industries, Welspun India, Bombay Dyeing and BRFL.