The overall sales of top textiles companies have increased marginally, and earnings before interest, tax, depreciation and amortization (EBITDA) margins declined significantly.

The findings are from the Wazir Textile Index (WTI) comprising cumulative financial performance of the top ten Indian textile companies along with update on market performance of Indian textiles sector for the nine months (April-December) of FY18 (9M FY18).

Based on detailed financial analysis, the WTI Sales index was calculated to be 108.5 in 9M FY18 as compared to 107.9 in 9M FY17. This indicates that the overall consolidated sales increased by 1 per cent during April-December this year.

Figure 1: WTI Sales                                                 Figure 2: WTI EBITDA

However, EBITDA declined drastically by 24 per cent. Consolidated WTI EBITDA stood at 79 in 9M FY18 as compared to 103.3 in 9M FY17. Due to introduction of the goods and services tax (GST), there was an impact on demand in Q2 which further impacted the profitability of major textile players in 9M FY18. Also, there has been increase in employee cost and raw material cost during this period thereby adversely affecting EBITDA margins.

Figure 3: WTI Cost

However, performance has rebounded in Q3 after a dip in Q2. Just after the introduction of GST, there was a dip in consolidated sales. However, in Q3 the sales and EBITDA levels improved for the textiles industry. On a consolidated level, sales increased by 3 per cent in Q3 vs Q2 FY18, after a dip of 3 per cent in Q2 vs Q1 FY18. Compared to the previous year, sales increased by 4 per cent in Q3 FY18 vs Q3 FY17, after a decrease of 5 per cent in Q2 FY18 vs Q2FY17.