Revenues from the sales of polyester yarn will grow by 20 per cent this fiscal on healthy demand, and increased blending with cotton yarn.

As per a CRISIL report, better profitability and expected modest capital spending will improve credit profiles of polyester yarn manufacturers. Last years, revenues from the sector grew by 60 per cent owing to a recovery in demand from end-user segments and price-hikes while sales volumes grew by 15 per cent.

Demand is expected to remain healthy this fiscal too, with garments and home textiles segments expected to grow at 16-18 per cent and 12-13 per cent in fiscal 2023, respectively, driven by recovery in domestic demand and moderate growth in exports.

Gautam Shahi, Director, CRISIL Ratings, says, polyester yarn’s cost effectiveness to blend with cotton yarn has increased its demand in the market.

With an increased differential between cotton and polyester yarn prices to sustain, the ratings agency expects 4-5 per cent of cotton yarn demand to shift to polyester yarn, adds Shahi. This shift is expected to continue for most part of this fiscal as end user segments operate in a price-competitive environment.