Top Textile Industry Sector Stocks to Buy in India 2024 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 stocks 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 sector shares 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.

What are Textile Stocks?

Textile stocks refer to the shares of companies operating in the textile industry. The production, processing, and distribution of textiles and apparel involve these companies. Investors interested in the textile sector may track the Nifty Textile Index, a market index that includes major textile companies and reflects the overall performance of the textile industry in the stock market. 

However, some investors may seek multibagger textile stocks, aiming for substantial returns over the long term. While others might be categorized as textile penny stocks in India, low-priced stocks with higher volatility and risk. Therefore, investing in the best textile stocks in India stock market can provide investors with exposure to the Indian textile industry.

Top 10 Textile Companies in India

Let’s quickly look at the top 10 textile 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:

Disclaimer: Please note that the above list is for educational purposes only, and is not recommendatory. Please do your own research or consult your financial advisor before investing.

Note: The data on the best textile company in India in the list is from 24th January 2024.  However, for real-time updates on textile stock prices and market trends, visit the smallcase stocks collection today!

Top Textile Stocks in India – A Brief Overview

Let’s review the mentioned textile manufacturing companies and learn more about the listed textile companies in India for 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. 
• Orbit Exports Ltd: Orbit Exports is a dynamic player in the textile industry, specializing in the export of a diverse range of fabrics and garments. With a focus on quality and innovation, the company has established itself as a key contributor to the global textile market.
• Voith Paper Fabrics India Ltd: Voith Paper Fabrics India is a leading provider of paper fabrics and related products, serving the paper industry with cutting-edge solutions. The company’s innovative approach and commitment to sustainability position it as a significant player in the paper and pulp sector.

• MK Exim (India) Ltd: MK Exim is actively involved in the export of textiles and garments, catering to international markets. Known for its extensive product range and adherence to quality standards, the company plays a crucial role in promoting Indian textiles on the global stage.

• Bhilwara Spinners Ltd: Bhilwara Spinners is a prominent player in the spinning industry, producing a wide range of high-quality yarns. With a focus on efficiency and sustainability, the company contributes to the textile value chain and meets the demands of both domestic and international markets.

• Soma Textiles & Industries Ltd: Soma Textiles is a well-established name in the textile manufacturing sector, known for its diverse range of fabrics and yarns. The company’s commitment to technological advancement and customer satisfaction positions it as a reliable player in the industry.

• Paras Petrofils Ltd: Paras Petrofils specializes in the production of polyester films and yarns, catering to various industries. With a focus on innovation and quality, the company plays a vital role in meeting the demand for polyester-based products in both domestic and global markets.

• Kandagiri Spinning Mills Ltd: Kandagiri Spinning Mills is a key player in the spinning industry, producing high-quality cotton yarns. The company’s commitment to sustainability and ethical practices makes it a preferred choice for customers in the textile and apparel sectors.

• Padam Cotton Yarns Ltd: Padam Cotton Yarns does manufacturing and trading of cotton yarns. With a customer-centric approach and a focus on product quality, the company contributes to the textile supply chain, meeting the requirements of diverse industries.

• Delta Industrial Resources Ltd: Involved in various textile-related activities, including the production and export of fabrics. With a strategic approach to market dynamics, the company aims to capture opportunities in the evolving textile sector, both domestically and internationally.

Indian 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 make it a top textile industry in India. 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.

How to Identify the Best Textile Stocks to Buy in India?

Identifying the best textile stocks to buy in India involves thorough research and analysis. Here are five important points to consider:

• Financial Health and Performance: Evaluate the financial health of textile companies by analyzing key financial indicators. Such as revenue growth, profit margins, and return on equity.

• Industry Position and Market Share: Assess the company’s position within the textile industry and its market share. Companies with a significant market share and a strong competitive position are likely to benefit from economies of scale.

• Management Quality and Corporate Governance: Examine the management team’s track record and their strategic decisions. A company with a transparent corporate governance structure and a history of sound management practices can navigate challenges successfully and create long-term shareholder value.

• Value Chain Integration and Diversification: Consider companies that have a well-integrated value chain and diversified product offerings. In multiple stages of the textile production process, a company involved in vertical integration can gain cost advantages and achieve better control over quality.

• Global and Domestic Demand Trends: Stay informed about the trends in global and domestic demand for textiles. Companies that adapt to changing consumer preferences, explore international markets, and thus, invest in technology to enhance product quality and innovation are better positioned for long-term success.

Factors to Consider Before Investing in Textile Stocks in India

Before investing in textile stocks in India, it’s crucial to consider various factors to make informed decisions. Here are key factors to evaluate:

• Market Conditions and Trends: Assess the overall market conditions and trends in the textile industry. Look at factors such as demand for textiles, global and domestic economic conditions, and emerging trends in consumer preferences.

• Financial Health of the Company: Evaluate the financial health of the textile company by analyzing financial statements. Consider parameters such as revenue growth, profit margins, debt levels, and return on equity. A financially sound company is better positioned for long-term success.

• Management Quality: Examine the management team’s track record, experience, and strategic vision. Companies with a history of effective leadership and sound decision-making are more likely to navigate industry challenges successfully.

• Industry Position and Competition: Understand the company’s position within the textile industry and its competitive landscape. Assess its market share, competitive advantages, and ability to withstand competition. Companies with a strong market position have the potential to grow.

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 stock in India can be a good 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. Thus, the revenue earned from exporting finished products, can affect 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 potentially 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 potential 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. The textile industry companies use cotton as a major raw material. These stocks can be influenced by factors such as the availability and price of cotton. 
• Synthetic and Blended Textile Stocks: Companies that produce textiles made from synthetic fibres or a blend of synthetic and natural fibres associated with these textile stocks. Factors such as the price of raw materials, technological advancements, and consumer demand can influence these textile stocks. 
• Garment Stocks: Companies producing finished garments, such as shirts, pants, and dresses, associate with these textile industry shares. These textile shares can be influenced by factors such as consumer demand, fashion trends, and production costs. 
• Technical Textile Stocks: Associated with companies that produce textiles. Used in industrial applications, such as automotive textiles, geotextiles, and medical textiles. 

• Home Textiles Stocks: These best textiles shares can be associated with textile manufacturing companies. These companies produce textiles used in home furnishings, such as bed linen, curtains, and towels.

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. 
• 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 can be relatively resilient to economic cycles. The reason is the potential 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 potentially drive stock price growth.

As always, investors must do their own research and/or consult their financial advisor before investing.

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 can offer an impressive opportunity to invest in the best textile stocks in India.  Thus, investing in textile stocks can potentially be a progressive and profitable strategy for you to diversify your portfolio. This can also 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.

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