Usually, a few investors show interest in buying the textile stocks. The investors tend to shy away from the same from these stocks as they are inconsistent in their financial performance and there are stretched balance sheets. In the past three years, the interest in the stocks of some textile firms has been increasing as there is healthy capacity utilization as a result of enhanced demand.
As per the ET Textile Index that covers firms across the value chain, there have been 90 percent returns in the last three years while Nifty has witnessed 40 percent returns in the same time frame.
Eventually, the valuations of the textile companies have significantly increased. In this situation, it definitely adds sense to invest with consistent performers that are expected to do well continuously in the next couple of years as they have a strong brands, market share, timely expansion and lighter balance sheets. As per the ET Intelligence Group, there are five such companies in the textile industry and they are listed below. Top 5 textile companies to invest in the market are:
Kitex Garments: The firm is expected to imitate the success story of Page Industries, the inner wear company that is known for the brand Jockey. Kitex is the third largest maker of infant wear across the globe. Kitex is a major supplier to brands including Jockey, Mothercare, Wal-mart, J.C. Penney, Gerber and Sarah Lee.
Siyaram Silk Mills: The ready-made and fabric manufacturer Siyaram is a consistent performer in the industry. The net sales of the firm increased at a compounded annual growth rate of 13 percent in the last three years. Right now, the ready-made division grabs 18 percent of the overall profit margin and it is followed by the fabric business at 12 percent and yam business at 5 percent.
Nandan Denim: Nandan Denim has 10 percent of the denim fabric market share in India and it is second largest denim fabric maker in the country. The entire segment has grown at a CAGR of 18 percent in the last 10 years. The firm is in plans to increase its share of exports by 15 to 20 percent in the next few years from the existing 9 percent.
Welspun India: Welspun India is the largest manufacturer of home textile products in India including bed sheets and terry towels. It supplies to retailers such as Target, J.C. Penney, Wal-Mart and Macy’s among others. The firm derives around 60 percent of the revenues from U.S.
Vardhman Textiles: Vardhman Textiles manufactures yarn and diversifies the manufacturing with its lucrative strategy that assures higher margins. The revenue generated by the fabric business of the company is increasing since three years.