India’s textile industry is experiencing significant growth due to the uncertainty surrounding Bangladesh. This is beneficial for Indian textile companies. Bangladesh has achieved remarkable textile export figures over the years. In Q1 2025, Bangladesh’s textile exports were $10 billion, while India’s were $4 billion. Bangladesh’s exports were three times higher than India’s. Bangladesh gained this advantage due to its free trade agreements with the EU, USA, and Australia. I think a similar shift is happening in the textile sector now, like what we saw in the chemical sector.
Coming to kitex, Their massive expansion seems to have come at the right time. They are increasing production fourfold, from the current 5 lakh units of kids’ wear to 20 lakh new units at the new factory in Telangana. I believe they won’t face significant demand issues for the new factory, as the MD mentioned two years ago that they had already secured 8 new customers for material supply. Additionally, the uncertainty in Bangladesh and the expiry of their free trade agreements in 2027 will likely boost the demand for textile companies.
MD said that if the current factory were in Telangana, he would have made an annual profit of ₹250 crores, compared to ₹100 crores in Kerala. Additionally, the significant incentives for setting up the factory in Telangana, as opposed to Kerala, are expected to positively impact the company’s bottom line.
I am of the opinion that when a company can demonstrate real profits in its bottom line, the share price can rise, and the P/E ratio can be re-rated, even if there are some governance issues (such as the MD’s involvement in politics). As long as the business generates solid profits, I believe the share price will increase, and a P/E re-rating will occur. of course i am deserved to be wrong.
Disc – Invested from 150 level. views are personal.
| Subscribe To Our Free Newsletter |
