India's textile stocks become market standouts on trade deals

Indian suppliers of T-shirts, bed linen and towels to global retailers such as Walmart Inc. are among this year’s biggest stock-market winners, with some investors betting the rally has further to run.

A Bloomberg-compiled equal-weight gauge of eight textile exporters has climbed more than 30% this year, compared with an 8% decline in benchmark NSE Nifty 50 Index, with the nation’s new trade deals and a friendlier tariff regime bolstering the industry’s competitiveness.

The sector “should see a re-rating as this is a real opportunity for Indian firms to grab market share,” said Pawan Bharaddia, co-founder and chief investment officer of Equitree Capital Advisors Pvt. SP Apparels Ltd., a supplier of garments to Tesco Plc, is a part of his portfolio. The stock has surged 60% this year.


India is set to implement its trade accord with the UK this month, is concluding one with the European Union, and is moving closer to a deal with the US, fueling optimism that these agreements will boost exports. At the same time, global brands are moving their sourcing away from China and a few Asian peers, creating opportunities for Indian exporters and manufacturers.

Textile companies are seen as among the biggest beneficiaries of these trade pacts. That optimism is also visible in institutional portfolios, with large investors including SBI Funds Management Ltd. and Quant Mutual Fund raising their stakes in textile firms in recent months.

Arvind Ltd., which counts global retailers including Gap Inc. among its clients, has surged 74% this year. Indo Count Industries Ltd., which supplies bed linen to Walmart Inc and Target Corp., has soared 54%.

“With global retailers improving order visibility and brands consolidating toward large compliant suppliers, major Indian textile exporters are well-positioned to capture disproportionate market share in the upcycle,” Motilal Oswal analysts wrote in a note last week.

Despite being one of the world’s largest producers, India accounts for only about 4% of the global trade in textiles and apparel. The government aims to expand the textile market to $350 billion by 2030, from an estimated $194 billion in fiscal year 2026.

Achieving that goal will require fresh investments in manufacturing capacity, particularly in garments, where India lacks enough large-scale exporters, according to Prerna Jhunjhunwala, an analyst at Elara Securities India.

“Future gains will depend on companies expanding capacity, winning export orders and delivering sustained earnings growth,” said Jhunjhunwala, who holds buy recommendations on KPR Mill Ltd. and Arvind Ltd., and is among the top rated analysts for the sector.