After peaking in the third quarter the turnover of Indian home textile exporters moderated in the quarters ended March 2022 and June 2022 amid a slowdown in demand. So says Icra.

Further, high and increasing raw material and logistic costs resulted in a consistent decline in operating margins since the second quarter of the last fiscal year. Rising inflationary concerns, the resultant slowdown in consumer discretionary spending, uncertainty on economic growth outlook and cautious buying by retailers to manage inventories are affecting sales in key export markets.

Icra expects the turnover of home textile exporters to contract further in the quarter ended September 2022 with muted sales in the December quarter as well. Overall, Icra expects a double-digit contraction in turnover as well as moderation in margins for home textile exporters in fiscal year 2023 following all-time high sales and profits in fiscal year 2022.

As the demand scenario has normalised and inflation is exerting pressure on consumer discretionary spending, Icra expects home textile companies to report a contraction in turnover in fiscal year 2023. Slower-than-expected sales have resulted in higher-than-average inventory levels in recent months.

As a result, Icra expects retailers to go slow/cautious on buying in the subsequent months to rationalise their inventory levels.