Feature

How long will the spin around textile stocks last?

Robust demand and better margins make the pandemic year a watershed one for textile players. But the jury is still out on how far the sentiment will hold

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Have you heard of the three brothers — KP Ramasamy, KPD Sigamani and P Nataraj? Most likely not. But those hailing from the textile town of Tirupur would know the trio since they run one of India’s biggest integrated textile units, KPR Mill. Eldest of the three, 71-year-old KPR started out as a powerloom fabric manufacturer in 1971 and with the help of his brothers, went on to create a textile giant straddling the entire value chain of yarn, fabric and garments. 

The company hasn’t had an impressive market history though — its debut in 2007 was a disaster. Its stock listed at Rs. 201, 10% lower than its issue price of Rs. 225. Post the global crisis of 2007-08, the slide continued and it fell to a low of Rs. 25 in 2009. It finally managed to climb above its issue price only in early 2014.

But FY21 was a watershed year in the company’s history as the stock more than quadrupled to Rs. 1,523 (as of June 30). The brothers emerged as newly minted dollar billionaires with their collective stake (74.72%) worth Rs. 77.20 billion on a market cap of Rs. 104.74 billion.

However, it’s not just KPR. Even other spinners and integrated players with a market cap of over Rs. 2 billion saw a good run with their stocks surging anywhere between 2x and 6x from March 2020 (See: Make that double) on the back of robust domestic and export demand that helped end FY21 on a positive note.

What’s impressive about the performance is that it came in a year ravaged by a pandemic and when other businesses were struggling to stay afloat. The turnaround couldn’t have come at a more fortuitous time for the sector which was facing growth pangs of its own making.

Threadbare
For an industry that has been the biggest source of employme

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