Motilal Oswal backs Arvind, Gokaldas and Indo Count on textile growth outlook
Motilal Oswal expects Indian textile companies to benefit from stabilising cotton prices, margin recovery and improving export demand. Its preferred picks include Arvind and Gokaldas Exports in apparel and Indo Count Industries in home textiles, with FY26-28 earnings growth projected to outpace recent trends.
What happened
Motilal Oswal expects Indian textiles to sustain growth and margin recovery as cotton prices stabilise. It prefers Arvind and Gokaldas Exports in apparel and
Key facts
- ~18% YoY textile-sector growth in Q1 FY27
- ~18-20% expected sector growth
- 10-year mean valuation of 24x P/E and 14x EV/Ebitda
- Last-decade topline, EBITDA and PAT growth of 6%, 4% and 3%
- FY26-28 coverage growth estimates: 14% topline, 27% EBITDA and 38% PAT
- 7-10% premium to mean EV/Ebitda and P/E multiples
Why this matters
Improving sector economics may make apparel and home-textile capacity, sourcing partnerships and export-led acquisitions more attractive, particularly for companies with differentiated US and European customer access.
What to watch
- Monthly US and European apparel and home-furnishing retail sales, import volumes and retailer inventory-to-sales ratios.
- Cotton prices, yarn spreads, polyester prices and INR/USD movement relative to contracted export pricing.
- Freight and container rates on India-US and India-Europe routes.
- Management commentary on order books, capacity utilisation, buyer consolidation and pricing negotiations.
- Indian export-incentive, duty-remission and trade-agreement developments, especially tariff competitiveness versus Bangladesh, Vietnam and China.
- US/EU consumer confidence, housing activity and discretionary-spending trends, which disproportionately affect home textiles and apparel.
- Prioritise customer diversification and deepen direct relationships with US and European retailers to capture replenishment-led order growth.
- Lock in cotton and foreign-exchange exposure selectively, preserving upside from stable inputs while reducing margin volatility.
- Increase utilisation before committing to large capacity additions; target productivity, automation and value-added product mix to convert volume growth into operating leverage.
- Home-textile suppliers should pursue premium bedding, sustainability-certified products and faster replenishment programs, where retailer switching costs are higher.
- Apparel exporters should use stronger order visibility to win share from smaller vendors facing financing, compliance or scale constraints.