The operating profitability of home textile companies is stabilizing by 150-200 basis points to 13 per cent due to a decline in export demand and increase in raw material and transportation costs, says Credit Agency Crisil Ratings. The agency analyzed 60 companies accounting for 60 per cent of the sector’s revenue. It predicts, credit outlook for the sector will remain stable.

The companies’ balance sheets, strengthened by healthy cash accrual and debt reduction over the past two fiscals, will lend support to exports, says the agency. India’s home textile exports account for 60-70 per cent of revenues. Most of these exports are directed to the US which accounts for 58 per cent of these exports.

Global demand for home textiles is likely to decline due to inflationary pressures with big retailers cutting inventory and consumers curbing discretionary spends. India’s home textile exports declined 5-6 per cent from January-April 2022 owing to a slowdown in sales of key US retailers in the past 3-6 months. The increase in raw cotton prices impacted exports further.