Promoters of several textile companies in India have increased their stake in the last nine months by purchasing fresh shares in the open market on expectations of a recovery in demand, and thus better profit margins. An increase in shareholding of promoters is considered positive as it sends out an affirmative message that they see value in their companies at the current levels and are optimistic about the long-term prospects.

Raymond’s promoters have increased their stake by 290 basis points to 46.7 per cent between April and December 2019. Similarly, promoters of Arvind have raised their stake by 165 basis points in the same period. Indo Rama Synthetics, which has a low market capitalisation, has witnessed its promoters increasing their stake by over 18 percentage points. Other players, such as Filatex India and Trident, too, have raised their stake since April 2019.

India has become competitive in both polyester yarn and fabrics in the last couple of quarters. This has prompted leading companies in the sector — Arvind and Filatex — to expand their fabric and polyester yarn capacities. The overall sentiment is currently weak because of the global economic slowdown. But the sentiment is expected to recover in the next one or two quarters.