Stocks to buy: Arvind, Nitin Spinners, Sanathan Textiles - Emkay bullish on three textile stocks (original) (raw)
Indian textile and apparel manufacturers have demonstrated resilience amid multiple global disruptions, including the COVID-19 pandemic, the Russia-Ukraine conflict, and elevated US tariff barriers. Analysts believe the ongoing US-Iran conflict in the Middle East is also likely to have only a short-term impact on margins, with profitability expected to recover sharply once conditions stabilise.
According to Harsh Mittal, Research Analyst at Emkay Global Financial Services, domestic textile companies are well-positioned to absorb future shocks, supported by a robust domestic market, a favourable USD-INR exchange rate, and healthy balance sheets.
Emkay Global initiated coverage on three textiles sector with a ‘Buy’ rating - Arvind, Nitin Spinners, and Sanathan Textiles.
India has traditionally been a textile powerhouse but has lost share in global apparel trade, which has remained stagnant at 3–4% over the past 15 years. However, Emkay Global believes the country is at an inflection point and poised to regain its competitive edge.
The brokerage expects this revival to be driven by a strengthening domestic man-made fibre (MMF) ecosystem through Production Linked Incentive (PLI) schemes, PM MITRA parks, and expanding petrochemical capacities.
Additional tailwinds include free trade agreements (FTAs) with major economies such as the EU, UK, and Australia; a 7–8% tariff advantage over China in the US market; favourable regulatory measures including import duties and GST rationalisation; stronger corporate balance sheets; and one of the fastest-growing domestic apparel markets globally.
Against this backdrop, Emkay estimates its coverage universe to deliver revenue, EBITDA, and adjusted profit after tax (APAT) CAGR of 21%, 34%, and 45%, respectively, over FY26–FY28E.
Mittal also highlighted that the likely global cotton shortage could keep yarn spreads range-bound at current levels in the near term, which bodes well for cotton spinners.
Additionally, technical textiles are emerging as a sunrise segment for the industry. These products find applications across packaging materials, defence uniforms and equipment, automotive interiors, industrial ropes, and nets, among others, while offering superior operating margins in the range of 15–30%.
“Technical textiles’ domestic market size recorded a CAGR of 7–8% over FY20–26P. We expect this to accelerate to early double-digit growth over the next five years, driven primarily by multiple FTAs, tariff advantages over China, ecosystem support through PLI schemes and PM MITRA parks, as well as GST cuts on MMF fibres and yarns to 5% from 12%,” Mittal said.
Here are the textile stocks to buy, according to Emkay Global:
Stocks to buy
Arvind | Buy | Target Price: ₹700
Nitin Spinners | Buy | Target Price: ₹750
Sanathan Textiles | Buy | Target Price: ₹550
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
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