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Rating agency ICRA in its latest report has said that with increase in material and logistic costs, home textile exporters are likely to witness a double-digit contraction in turnover as well as moderation in margins in 2022-23. It stated that after peaking in the third quarter of FY22, the turnover of home textile exporters moderated in the quarters ended March 2022 and June 2022 amid a slowdown in demand.

Further, the report noted that high and increasing raw material and logistic costs resulted in a consistent decline in operating margins since the second quarter of FY22. It said rising inflationary concerns, the resultant slowdown in consumer discretionary spending, uncertainty on economic growth outlook and cautious buying by retailers to manage inventories are affecting sales in key export markets. It expects the turnover of home textile exporters to further contract in the quarter ended September 2022, with muted sales in the December quarter as well.

Overall, Icra expects a double-digit contraction in turnover as well as moderation in margins for home textile exporters in FY23, following all-time high sales and profits in FY22. As the demand scenario has normalized and inflation is exerting pressure on consumer discretionary spending, it expects home textile companies to report a contraction in turnover in FY23.