Summary:
The Indian textile industry is a major contributor to the economy and is predicted to reach a value of USD 190 billion by 2025-26. This presents a golden opportunity for investors. To help you choose the best textile stocks in which to invest in 2023, we have compiled a list of the top five with the most growth potential. Read on to find out which stocks made our list and why.
When you hear the word 'textile', what springs to mind? For many Indians, it's the vivid colours of saris, the soft touch of cotton shirts, and the warmth of woollen scarves. India's textile industry is a vibrant fusion of traditional and contemporary styles and is known for producing not only everyday garments but also beautiful handloom fabrics.
India is the world's second-largest producer of textiles and garments and this industry stands as a significant pillar of India's economy. It makes up 13% of industrial production, 2.3% of the GDP, and it is also the second-largest employer after agriculture, with a workforce of 4.5 crore. Experts believe the industry's value will reach USD 190 billion by 2025-26. This growth offers a great opportunity for investors.
To help you invest in textile stocks that show the maximum potential for growth and therefore, the highest changes of good returns for you, we've compiled a list of the top five companies that stand to benefit from the expanding global market and government policies. But, before we get to the list, let's talk about some of the factors that are important to consider when choosing these stocks.
4 important factors to consider when investing in textile stocks in 2023
Textile stocks can be a good investment, but it is important to do your research. Here are five of the most important factors to consider before you invest:
- Net profit: It's the money a company has left after paying all its bills. A higher net profit means the company is doing well financially.
- Market cap: This is the total value of a company's shares. A bigger market cap usually means the company is more stable and trusted by investors.
- P/E ratio: This number tells you how much investors are prepared to spend for every rupee a company earns. A lower number might mean the stock is a good deal, while a higher one could mean it's overpriced.
- Dividend yield: Dividend yield shows how much money you could get back as dividends for every rupee you invest in the stock. A higher dividend yield can be a sign that the stock offers a good income.
The top 5 textile stocks to invest in 2023
Here are five textile stocks with good investment potential in the coming year, based on data until 31 August 2023.
| Market cap | Net profit (June 30, 2023) | P/E ratio | Dividend yield |
| ~ INR 24,733.66 crore | INR 202.84 crore | 32.73 | 0.53 |
KPR Mills is a leading textile firm in Tamil Nadu, India, that manages everything from yarn creation to finished clothing production. They've recently started operations in Ethiopia with a modern garment facility and have also set up a business office in Singapore. Looking ahead, KPR Mills aims to use more technology in their manufacturing processes, open more overseas facilities, enter the retail market, and support their staff with modern amenities and education. We place this company in the first position because of its strong financial performance and ability to adapt to changing trends.
| Market cap | Net profit (March 31, 2023) | P/E ratio | Dividend yield |
| ~ INR 18,727.64 crore | INR 130.66 crore | 46.14 | 0.38 |
Trident is a leading textile and paper company based in Ludhiana, Punjab. It is one of the largest towel manufacturers in the world and a major producer of yarn, home textiles, and paper. The company has a strong focus on exports, and its products are sold in over 50 countries.
| Market cap | Net profit (June 30, 2023) | P/E ratio | Dividend yield |
| ~ INR 12,181.62 crore | INR 202.84 crore | 36.08 | 0.08 |
Welspun is a global company that specialises in home textiles but has branched out into pipes and infrastructure as well. Recognised as one of India's leading textile manufacturers in the field of home products, they produce items like towels, sheets, and carpets. Beyond textiles, they're involved in sectors such as steel, oil, gas, and advanced flooring. With such a diverse portfolio and a strong manufacturing base, Welspun continues to set benchmarks in the industry.
| Market cap | Net profit (March 31, 2023) | P/E ratio | Dividend yield |
| ~ INR 12,854.39 crore | INR 194.35 crore | 8.70 | 0.15 |
Raymond Ltd. is headquartered in Mumbai and is one of the world’s top integrated fabric makers. This nearly 100-year old company holds a strong position in India and dominates over 60% of the suiting market. Raymond is also the country's leading producer of woollen fabric. Their global reach extends to over 60 countries, including the USA, Canada, Europe, and the Middle East which showcases their vast textile expertise.
| Market cap | Net profit (March 31, 2023) | P/E ratio | Dividend yield |
| ~ INR 11,345.46 crore | INR 204.90 crore | 18.82 | 4.46 |
Vardhman is a leading textile manufacturer in India with an annual turnover surpassing INR 7,000 crores. They produce vast amounts of yarn and woven fabric and employ over 28,000 people. With a legacy spanning over 50 years in the textile sector, they operate 18 advanced manufacturing units and cater to clients in over 75 countries. Their commitment to excellence positions them as a top cotton yarn exporter in India.
Note: The above insights are for educational purposes only and are based on data up to 31 August 2023. Readers nust conduct their own research and due diligence before making any investment decisions.
Wrapping up: Key points to remember
- India is the world's second-largest textile and garment producer today and the textile industry is growing fast. It offers promising opportunities for investors.
- However, the textile industry is cyclical and subject to market risks, so investors should be prepared for periods of volatility.
Disclaimer
The investment options and stocks mentioned here are not recommendations. Please go through your own due diligence and conduct thorough research before investing. Investment in the securities market is subject to market risks. Please read the Risk Disclosure documents carefully before investing. Past performance of instruments/securities does not indicate their future performance. Due to the price fluctuation risk and the market risk, there is no guarantee that your personal investment objectives will be achieved.