Margins of textile mills buoyed by cotton price fall, but hurdles lie ahead

The profit margins of textile mills improved during the second quarter (July-September) of the current financial year. Input costs were low, driven largely by a fall in cotton prices.Leading players Welspun India, Trident and Vardhman Acrylic reported emphatic growth in turnover and net profit, as did Raymond and Surat Textiles.Welspun India, for example, posted 21.4 per cent growth in net profit at around Rs 1.217 billion, over the same period last year. Sales grew 11 per cent, to Rs 17.8 bn. "Raymond's overall performance was above our expectations, driven by broad-based growth across divisions. Sales increased 16 per cent, Ebitda (operating earnings) by 36 per cent and net profit by 63 per cent, above our expectations. Management commentary was cautious on Q3 growth trends but it expects growth to improve from Q4, due to the wedding season. While Raymond has maintained its 100 basis points (bps) margin expansion guidance (estimate) for the year, we believe that upsides are likely, .

from Markets https://ift.tt/2OhNHw2