Indian cotton spinners see volume boost with favorable prices: Report.

Indian cotton spinners are enjoying a period of growth due to favorable cotton prices, according to a recent report by Avendus Spark, a leading Indian institutional research firm. The report highlights that domestic cotton prices remain lower than global benchmarks, creating a cost advantage for Indian spinners. This has translated into increased production volumes, as companies ramp up operations to meet demand.

The current price differential is a boon for the Indian cotton spinning industry, say analysts and spinners are capitalizing on this opportunity to expand their output and strengthen their position in the market. The report's findings align with broader trends in the Indian textile sector. As per Avendus Spark's analysis, the industry is witnessing signs of post-pandemic recovery, with garment companies reporting a revival in order book momentum. This positive outlook is further bolstered by strong export growth, particularly in the home textiles segment.

However, the report cautions the current price advantage may not be sustainable in the long run. The analysis notes Indian cotton prices have recently shown signs of rising, inching closer to global levels. This trend, if it continues, could eventually erode the cost benefit currently enjoyed by domestic spinners.

Overall, the Avendus Spark report paints a picture of an Indian cotton spinning industry on the upswing. Lower domestic cotton prices have provided a springboard for volume growth, contributing to the sector's post-pandemic resurgence. However, long-term sustainability hinges on managing input costs and navigating potential price fluctuations in the global cotton market.

The report states, cotton-related exports rose 20 per cent sequentially and 18 per cent Y-o-Y despite a brief period where Indian cotton prices were lower than global prices. Currently, Indian cotton prices are about 13 per cent higher than global prices. Garment manufacturers saw EBITDA margins improve by 177 basis points in 4QFY24 due to lower input costs, with vertically integrated players reporting better margin growth.

The report also states revenues from the man-made staple fibers (MMSF) sector grew by 5 per cent Y-o-Y. However, cheaper imports from countries like China and Bangladesh led to pricing pressures. Capacity constraints limited volume growth for MMSF players, though several companies plan to increase capacity in the coming quarters. The Production Linked Incentive (PLI) scheme is expected to encourage further investments in MMSF yarn production.