The decline was unevenly distributed across product categories. Blankets and curtains saw a relatively lower reduction at approximately 12 per cent, compared to 18-19 per cent in other categories during FY23. The bed, table, toilet, and kitchen linen segments reported a sharper decline of around 16 per cent in the initial four months of FY24, as compared to 7-13 per cent in other categories, as per ICRA.
The US remains the key market for Indian home textiles, holding a 56 per cent market share in FY23 and rising slightly to 58 per cent in the first four months of FY24. ICRA predicts that the future growth catalyst could be the pending free trade agreement (FTA) discussions with the UK and the EU. Agreements already in place with Australia and the UAE are also expected to positively impact exports.
ICRA’s sample set of four listed home textile companies, which account for around 35-40 per cent of India’s total home textile exports, reported a meagre 3 per cent year-on-year (YoY) growth in Q1 FY24. However, ICRA is optimistic about a recovery, expecting a 10-12 per cent YoY growth in Q2 FY24, spurred by festive orders for Thanksgiving and Christmas, as well as improved demand conditions in key export markets.
An improvement in profit margins was noted starting from Q4 FY23, following a correction in cotton prices. The margins for ICRA’s sample set are estimated to have remained stable at around 15-16 per cent in Q2 FY24.
ICRA expects its sample set to report a 7-8 per cent increase in turnover for FY24, recovering from a 10 per cent decline in FY23. This outlook is supported by a rebound in demand conditions and restocking activities by large retailers, primarily in the US.
Inventory levels in US retail stores across furniture, home furnishing, electronics, and appliance sectors have fallen from calendar year 2022 (CY22). ICRA anticipates that the destocking phase is nearing completion for big retailers. This is expected to result in renewed purchasing in the upcoming months, thereby improving the overall order books for Indian home textile exporters.
Fibre2Fashion News Desk (DP)