Indian home textile exporters saw a success story on pandemic-induced lifestyle changes: ICRA

15 September 2021: Riding high on pandemic-induced lifestyle changes stemming from heightened consciousness about hygiene and increased prevalence of stay-at-home options, Indian home textile exporters are set to register robust performance during FY2022. These factors have driven a sharp surge in demand for home improvement products over the past one year and the demand momentum is expected to sustain during Q2-Q4 FY2022, continuing on the trend of the past three quarters. ICRA’s sample set of companies (comprising four large, listed players, accounting for ~35-40% share in India’s home textile exports) are projected to clock a robust double-digit growth of ~20-25% in FY2022. This follows a subdued 5% growth in revenues reported by the sample in FY2021, primarily due to ~40% Y-o-Y dent in performance in Q1 FY2021; the sample grew by ~25% Y-o-Y during the rest of the year.

It is noted that the sample had reported ~18% Y-o-Y decline in operating income in Q4 FY2020 as well, as the pandemic had started affecting the key countries of export. However, even after adjusting the base for the same, Indian home textile exporters are estimated to have reported a healthy growth of ~15-20% in the nine-month period ended March 2021.

Elaborating on this, Pavethra Ponniah, Senior Vice President & Co-Group Head, Corporate Sector Ratings, ICRA, said “For the past three quarters, sales for the sample set have averaged ~25-40% higher than the 3-year average for the pre-Covid period. Home textile exports was one of the first few textile segments to recover from the impact of the pandemic last fiscal, with companies reverting to Y-o-Y growth from Q2 FY2021 itself and reporting three consecutive quarters of double-digit growth thereafter.

The export demand has been mainly driven by the US, the largest market, accounting for ~60% of India’s home textile exports. Compared to a 9% increase in India’s home textile product exports of US$5.7 billion in FY2021, exports to the US increased by ~14%, while exports to the other major markets of the UK and the EU reported a Y-o-Y decline during the year. Besides faster opening up, increase in exports to the US is partly attributable to the distribution model for these products, with a meaningful share accounted for by the large departmental chains that remained open even during the lockdown phase.”