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Textile – Yarn and apparel companies registered strong Q1

ICICIdirect Research 07 Aug 2026 DISCLAIMER

Strong export demand (especially from China) and improving demand from domestic textile players boosted the performance of domestic yarn players in last two quarters. Better realisation and low-cost inventory of cotton aided yarn manufacturers to achieve higher spreads aiding strong YoY improvement in the EBIDTA margins in Q1FY27. The companies are confident of achieving higher spreads in Q2FY27 on back of strong demand environment. Apparel exporting companies with diversified production base also posted strong performance in Q1.

  • SportKing India registered 20% revenue growth driven by ~20% growth in the yarn realisation. Its capacity utilisation remained stable at 96%. Cotton yarn spreads improved to Rs.133/kg in Q1FY27 vs. Rs.107/kg in Q4FY26 and ~Rs90/kg in Q1FY26. PAT grew by 1.2x YoY to Rs76cr.
  • GHCL Textiles registered 53% YoY revenue growth with yarn business growing by 41% (25% volume growth; 13% realisation growth). Its capacity utilisation stood at 99%. Cotton yarn spreads improved to Rs160/kg in Q1FY27 vs. Rs138/kg in Q4FY26. Strong expansion in the EBIDTA margins led to 53% YoY growth in PAT to Rs298.7cr.
  • Pearl Global Industries (PGIL): PGIL reaped the benefits of diversified production base with revenues growing by 24% (driven by 21% Volume growth). Its average capacity utilisation stood at 70-75% in its various located manufacturing units. EBIDTA margins improved by 156bps YoY to 10.7% and PAT grew by 54% YoY to Rs101cr. Management retained its guidance of mid-teens revenue growth and EBIDTA margins to be close 11% in FY27.

Outlook: FTA with UK/EU will provide long term growth opportunities for textile companies. Yarn companies will continue to maintain its strong performance in Q2FY27 with spreads expected to remain high on YoY basis for third consecutive quarter. This will help yarn companies to maintain strong margin expansion and double digit PAT growth in Q2. We expect growth prospects for apparel companies and home textile companies to improve on back of steady demand in the US market and improving order visibility in the markets such as UK/EU.

Preferred Picks: In the textile space, We PGIL in the apparel export space (Reco. – Buy; PT – Rs2,658) and yarn space we like Sportking India (Reco. – Buy; PT – Rs273)

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