Motilal Oswal has initiated coverage on five textile and apparel companies, citing a gradual recovery in global demand, capacity additions, improving utilisation levels and potential gains from lower tariffs and free trade agreements. The brokerage has assigned 'buy' ratings to Gokaldas Exports, Arvind, Pearl Global Industries, Indo Count Industries, and Welspun Living, while maintaining 'neutral' ratings on KPR Mill, Trident and Vardhman Textiles. According to The Financial Express, the brokerage expects a gradual recovery in global textile and apparel trade, supported by inventory normalisation, easing inflation and lower tariffs across major textile-exporting countries. The coverage comes as India's textile exporters are entering a multi-year growth phase after several difficult years marked by weak global demand, supply-chain disruptions, and high inflation.
Brokerages believe the upcoming free trade agreements with the UK and the European Union could be among the biggest catalysts for India's textile industry. According to Emkay, the European Union represents one of the largest opportunities for Indian exporters, with the bloc importing more apparel each year than the US. India's share of apparel exports to the EU has already increased to around 30% from nearly 25% in FY22, with the proposed trade agreements expected to provide Indian exporters with a duty advantage over competitors such as Pakistan and Bangladesh. Trade agreements with the UK and the EU could remove import duties of around 12% on Indian textile and apparel products, allowing Indian exporters to compete more effectively with countries such as Bangladesh and Vietnam. The improved sourcing visibility and healthier ordering cycles are expected to drive stronger order flows, better capacity utilisation, and improved margin visibility for Indian textile exporters.
The Indian kidswear market has emerged as the fastest-growing segment within apparel, valued at around ₹2 trillion in 2024 and projected to grow at a compound annual growth rate (CAGR) of 9.4 per cent between 2024 and 2029, according to the Clothing Manufacturers Association of India (CMAI). This growth rate surpasses menswear at 8.4 per cent and womenswear at 8.9 per cent, with the segment expanding across casualwear, ethnicwear, activewear, and licensed merchandise categories. "Kidswear is the fastest-growing segment within apparel," said Rahul Mehta, chief mentor at CMAI. "While organised retail is gaining share as incomes and aspirations rise, the category remains largely controlled by Indian labels rather than large international brands." The market remains highly fragmented, with organised players accounting for roughly 30 per cent while regional and micro, small, and medium enterprise-led brands command nearly 70 per cent of the market.
Textile exporter stocks witnessed a significant rally on Wednesday, with shares surging as much as 11.2% following Motilal Oswal's positive coverage initiation. As per The Economic Times, Gokaldas Exports gained 3.7%, Arvind advanced 6.3%, Pearl Global jumped 11.2%, Indo Count Industries surged 9.5%, and Welspun Living rose 5%. The brokerage's price targets imply substantial gains of 9% to 28% over Wednesday's closing prices, reflecting strong investor confidence in the sector's growth prospects. This surge reflects a new investment cycle in the Indian textile sector, with companies focusing on higher-margin segments and value-added products to capitalize on global sourcing trends.
Gokaldas Exports receives a 'buy' rating with a target price of ₹1,110, with Motilal Oswal expecting strong growth driven by capacity expansion in India and higher utilisation at its Africa operations following the renewal of the African Growth and Opportunity Act (AGOA). Arvind gets a 'buy' rating with a target price of ₹670, as the brokerage expects a strategic shift from fabric-focused business towards garments to expand its addressable market. Pearl Global Industries is assigned a 'buy' rating with a target price of ₹2,300, expected to benefit from capacity expansion across India, Bangladesh, Vietnam and Indonesia. Indo Count Industries receives a 'buy' rating with a target price of ₹550, with the brokerage expecting gains from growth in utility bedding business and domestic bed linen segment. Welspun Living gets a 'buy' rating with a target price of ₹200, with home textile business expected to benefit from lower tariffs and potential FTAs with the UK and European Union.
The Indian textile sector is entering a strong capital expenditure cycle, with leading companies announcing significant investments across garments, fabrics, technical textiles and value-added categories to capture rising global sourcing opportunities. According to The Financial Express, unlike earlier expansion phases focused on commoditised products, the current investment cycle is directed toward higher-margin segments such as garments, MMF, specialty fabrics and advanced textiles, along with automation, sustainability and premiumisation initiatives. Companies including Gokaldas Exports, Arvind, Pearl Global, KPR Mill, Welspun Living and Vardhman Textiles have announced expansion plans aimed at capturing rising global demand. Government initiatives such as the PM MITRA scheme, the Production Linked Incentive (PLI) scheme and ATUFS are also supporting fresh investments across the industry. Emkay expects the sector's revenue to grow at a compound annual growth rate (CAGR) of 21 per cent through FY28, while profit is projected to grow by 45 per cent over the same period, with the brokerage believing India has reached an inflexion point to reclaim its position in the global textile market.
