- 26 Aug 2022
- ICICIdirect Research
Elevated cotton prices aiding growth of polyester manufacturers
News: As per Crisil, robust demand from end-users and increased blending with cotton yarn due to decadal high prices of cotton is expected to boost the revenue of polyester yarn makers by 18-20 per cent in FY23.
View: Higher demand from end users industries and increased blending with cotton yarn is expected to lead to high utilisation levels for polyester yarn manufacturers. Also sustained demand would enable better profitability ( as per the report , spreads are likely to sustain at FY22 levels of aroundRs 29 per kg vsRs 22 per kg in FY21) for the polyester yarn manufacturers. Improved profitability is likely to aid in debt reduction and strengthening of balance sheet of polyester yarn manufacturers in India. Negligible capacity addition and demand growth of 7-8% is likely to sustain the profitability at elevated levels in FY23.