Best Textile Sector Stocks to Buy in India 2023 for Your Portfolio

The Indian textile industry has a rich history that dates back to ancient times. Traders worldwide highly sought the high-quality cotton and silk fabrics that India produced. India’s textile and apparel industry is the largest source of foreign exchange earnings and one of the leading textile stock segments.

As per reports,  

The industry contributes 4% to the country’s gross domestic product (GDP), 20% to its industrial output, and almost 30% to exports. About 38 million people are employed in the Indian industry, making it the single largest source of industrial jobs and the second-largest overall (after agriculture).

Textile stocks can offer investors a unique opportunity to gain exposure to a diverse and dynamic sector with the potential for high growth and resilience to economic cycles. Therefore, in this blog, we will explore the various aspects of the Indian textile sector, focusing on textile shares and textile industry companies. Additionally, we will also understand why business leaders and investors are keen to invest in textile stocks.

Top 10 Textile Companies in India

Let’s quickly look at the top textile industry stocks in India that are reputable in the share market and have a proven track record for impressive returns. The textile stocks list is as follows:

Note: The data is from 31st August, 2023. However, for real-time updates on stock prices and market trends, visit smallcase stocks collection today!

Textile Industry: Synopsis

The Indian textile industry, during the British colonial period, exported textiles to many countries and was one of the largest in the world. However, after independence, the industry faced several challenges, including a need for modernization and competition from synthetic fabrics. 

Currently, the textile industry contributes about 14% to the country’s industrial output and about 17% to export earnings. The Indian textile industry overview is diverse, with various segments such as cotton, silk, jute, wool, and synthetic fibres. The cotton textile industry dominates the sector, which accounts for around 70% of the total textile production. Other significant segments include the synthetic and silk textile industries.

Therefore, the Indian government has launched several schemes to support the growth of the textile industry. One such scheme is the Amended Technology Upgradation Fund Scheme (ATUFS), which financially supports textile companies in modernising their machinery and equipment. Another scheme is the Integrated Textile Park (ITP) scheme, which aims to develop textile parks that provide infrastructure and support services to textile industry companies.

Thus, investing in the textile industry shares may offer potential opportunities for growth and profitability.

Top Textile Stocks in India – A Brief Overview

Let’s review the mentioned textile manufacturing companies and why they are considered the best textile stocks in India for some investors. 

Vedant Fashions Ltd

Vedant Fashions Ltd is an Indian textile company founded in 1971 by Mr. Ratan Jindal. The company operates in the manufacturing and exporting of textiles and garments segments. 

• High Risk: Stock is 2.44x as volatile as Nifty
• Midcap: With a market cap of ₹30,601 cr, stock is ranked 199

Surat Textile Mills Ltd

Surat Textile Mills is a well-established textile company with a history of producing a wide range of fabrics and textiles, contributing to India’s textile industry.

• High Risk: Stock is 4.14x as volatile as Nifty
• Smallcap: With a market cap of ₹190 cr, stock is ranked 1,971

Shri Dinesh Mills Ltd

Shri Dinesh Mills Ltd is a prominent textile company in India. Established in 1961, it has a strong presence in manufacturing and exporting textiles and fabrics, catering to both domestic and international markets.

• High Risk: Stock is 3.30x as volatile as Nifty
• Smallcap: With a market cap of ₹281 cr, stock is ranked 1,753

How to Invest in Textile Stocks in India?

You can invest in Indian textile stocks through individual companies on stock exchanges like NSE or BSE. Alternatively, textile-focused mutual funds or ETFs offer diversified options. Indirect exposure can be gained by investing in related businesses along the textile supply chain, such as cotton producers or machinery suppliers. Research and consider your investment goals and risk tolerance before proceeding.

Factors Affecting Textile Sector Stocks

With an overwhelming presence in the country’s economic life, portfolio investing in textile stocks can be an attractive option for many investors. Therefore, let’s review some of the factors before we begin further. 

• Raw Material Prices: The price and availability of raw materials, such as cotton, silk, and synthetic fibres, can impact the profitability of textile manufacturing companies and, therefore, affect textile stocks and textile share prices.

• Foreign Exchange Rates: The value of the Indian rupee relative to other currencies can impact the cost of importing raw materials and the revenue earned from exporting finished products, affecting the profitability of textile companies and their share prices. 

• Government Policies: Policies related to trade, taxation, and regulation can impact the company’s profitability and affect textile share prices. For example, changes in import/export policies can impact the availability and cost of raw materials, while changes in taxation policies can affect the cost of production and profitability.

• Export Market Conditions: The demand for textile products in international markets can impact the revenue textile manufacturing companies earn. As a result, the textile share prices also get affected. 

Types of Textile Sector Stocks

Textile stocks refer to the stocks of companies involved in the textile industry. These stocks can be divided into categories based on the type of textile product the company produces. The categories of textile stock are listed below:

• Cotton-Based Textile Stocks: The best textile stocks to buy in India are associated with companies that produce textiles made from cotton. Cotton is a major raw material used in the textile industry companies, and these stocks are influenced by factors such as the availability and price of cotton. 

• Synthetic and Blended Textile Stocks: Companies that produce textiles made from synthetic fibers or a blend of synthetic and natural fibres associate with these textile stocks. Factors such as the price of raw materials, technological advancements, and consumer demand influence these textile stocks. 

• Garment Stocks: These textile industry shares are associated with companies that produce finished garments, such as shirts, pants, and dresses. These textile shares are influenced by factors such as consumer demand, fashion trends, and production costs. 

• Technical Textile Stocks: These stocks are associated with companies that produce textiles. Used in industrial applications, such as automotive textiles, geotextiles, and medical textiles. These textile stocks are influenced by factors such as technological advancements, government regulations, and global demand. 

• Home Textiles Stocks: These shares are associated with textile manufacturing companies. These companies produce textiles used in home furnishings, such as bed linen, curtains, and towels. These textile stocks are influenced by factors such as consumer demand, fashion trends, and production costs.

Why Should You Invest in Textile Sector Stocks?

As the world’s largest textile industry, India has the most spindles installed as far as spinning yarn is concerned. Therefore, for investing in textile sector stocks in India, you must have a Demat account to witness great portfolio returns. Let’s learn how. 

• Growth Potential: Textile brands in India have a high growth potential due to factors. Such as increasing population, rising disposable income, and changing consumer preferences. Investing in textile stocks can provide exposure to this growth potential.

• Export Potential: Indian textile companies have a significant presence in international markets and have the potential to expand further. Investing in textile stocks can provide exposure to this export potential.

• Diversification: Investing in textile sector stocks can diversify a portfolio, as the textile industry shares are not highly correlated with other sectors.

• Resilience to Economic Cycles: The textile industry companies are relatively resilient to economic cycles. The reason is the demand for textile products tends to remain stable even during economic downturns.

• Brand Recognition and Reputation: Many textile companies in India have established brands and a good reputation for quality products. This gives a competitive advantage and drives stock price growth.

Are There Any Challenges?

Since every investment opportunity comes with a certain degree of risk, it becomes important to consider every aspect. Therefore, below we have listed some primary challenges of investing in textiles business and how you can mitigate them by investing in smallcase (smart investment portfolio platform). 

• Fluctuating Demand: Fluctuations in demand can impact the revenue and profitability of a textile industry in India, affecting textile share prices. Therefore, by investing in smallcase, you can mitigate the challenge. Thus, by accessing expert-curated investment themes and portfolios that focus on well-positioned companies to navigate market fluctuations.

• Competition from Other Countries: Several countries (China, Bangladesh, and Vietnam) offer similar products at lower prices than Indian textile companies. These countries can impact the export potential and profitability of Indian textile companies and textile share prices. Therefore, you can invest directly in companies with strong brand recognition, established customer bases, and unique product offerings to avoid foreign competition.

• Dependence on Government Policies: The textile industry is highly dependent on government policies related to trade, taxation, and regulation. Changes in textile share prices, production costs, raw materials availability, and export potential can affect a textile company’s profits. Hence, smallcase provides regular updates on policy changes and their possible impact on portfolio investment themes. This allows investors to make informed investment decisions.

To Wrap It Up…

Looking at the increased consumption and unique moat of textile manufacturing companies, the textile sector stocks offer an impressive opportunity to invest in the best textile stocks in India.  Thus, investing in textile stocks can be a progressive and profitable strategy for you to diversify your portfolio and capitalise on India’s growing textile industry. However, it’s essential to conduct thorough research and consult with a financial advisor before making any decisions.

Happy Investing!

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