The stock price of the largest global home textile bed linen company surpassed its previous high of Rs 169.75, touched on August 30, 2023. At 10:45 AM; it quoted 9 per cent higher at Rs 172.30, as compared to 0.55 per cent decline in the S&P BSE Sensex. The average trading volumes at the counter jumped over six-fold with a combined 2.5 million shares changing hands on the NSE and BSE.
In Q4FY23, ICIL’s profit after tax (PAT) grew 11 per cent year-on-year (YoY) and 2.5 times sequentially to Rs 94.70 crore. Revenue jumped 23 per cent YoY to Rs 807.1 crore. Earnings before interest, taxes, depreciation, and amortization (EBITDA) margin increased 324 bps YoY to 17.9 per cent.
The company’s sales volume (including GHCL unit) grew 16 per cent YoY to 20.4 million meter against 17.6 million meter in Q4FY22. Average realisations grew 6 per cent YoY to Rs 387/metre.
The demand trajectory for home textiles, which had materially slowed down in key geographies such as the US, UK and Europe were gradually picking up pace (although Inventory at retailers level continue to remain higher levels). With greenshoots visible, the company has guided for volume of 85-90 mn metre in FY24E (up 17 per cent YoY). The company remains positive about the demand scenario in the long run on the back of China + 1 strategy and government steps to support the Indian home textile export market (FTA signed with Australia, expectation of signing of further FTAs with UK, Canada and EU), ICICI Securities said in result note.
Meanwhile, with cost pressure abating to a large extent, ICRA expects the company’s operating performance to improve over the medium term, supported by its established position as one of India’s leading home textiles exporters and long-term relationships with key customers, although the demand trend from key export markets remains a key monitorable.
The industry has been countering headwinds of weak demand amid rising inflation in developed countries, destocking by large global retailers and high input costs. ICRA expects improvement in ICIL’s performance, going forward, on the back of moderation in cotton prices, normalisation of freight costs, increasing backward integration and improving geographical diversification of revenue over the medium term. While the metrics are likely to remain lower in FY2023 compared to FY2022 levels, the coverage indicators are expected to improve in FY2024, the rating agency had said in February 2023 rationale.