Gokaldas, Vardhman, Siyaram rally up to 8%. What's driving textile stocks?

Business Standard

11 hours ago

Textile stocks price movement today
Shares of textile companies Vardhman Textiles, Gokaldas Exports, Siyaram Silk Mills, Alok Industries, Indo Count Industries, Sangam India and Nahar Spinning Mills have rallied between 5 per cent and 8 per cent on the BSE in Tuesday's intra-day trade amid heavy volumes.
At 09:14 AM; top 4 out of 5 stock winners from the BSE Smallcap index were from the textile sector, surging more than 6 per cent. In comparison, the BSE Sensex was trading flat at 83,449.
What's driving textile stocks today?
The US has imposed an updated tariff of 35 per cent on Bangladesh; no major reduction from 37 per cent announced on April 2, 2025. Last week the US announced an imposition of a 20 per cent tariff on Vietnam.
According to ICICI Securities, Bangladesh is one of the key ready-made garment exporters to the US with 9 per cent market share while Vietnam holds 19 per cent market share. The US is yet to announce tariff rates for India (currently 10 per cent overall tariff; ~26 per cent for textile sector considering the differential rate).
'If India manages to sign a favourable deal with the US, we might see lower tariffs on ready-made garment exports compared with other countries such as China, Vietnam and Bangladesh, which will help India's share to the US exports improve from the current levels of 6 per cent. We should expect the US-India to sign a mini-trade deal in couple of days, which will determine revised rate for key sectors. As of now scenario is positive for textile manufacturers,' the brokerage firm said in a note.
However, Indian textile exporters like Gokaldas Exports and Welspun Living acknowledged that margins may remain under pressure in 1HFY26, as global buyers adopt a cautious stance amid uncertainty surrounding input costs and consumer demand. However, despite these pressures, Indian players remain cautiously optimistic, characterizing the current weakness as transitory - evident from players like Arvind and Pearl Global hinting towards mid-teens growth in FY26 reflecting confidence in a potential recovery in 2HFY26.
The recently signed UK-FTA plays well for Indian textile players enabling them to strengthen their presence in the UK market, thereby reducing their heavy dependence on the US in an uncertain tariff situation. The huge addressable market size / top-notch execution / higher factor costs in Vietnam bodes well for key players in Indian home textile / apparel sector, analysts at JM Financial Institutional Securities said in its sector report.
Meanwhile, Gokaldas Exports' operating income rose by 29 per cent (CAGR) in the last three years, touching ₹3,875.8 crore in FY2025, supported by healthy demand and inorganic expansion done in the last two years. According to ICRA, the growth is likely to sustain with the expected shift in procurement (in apparel sourcing) by large customers as a part of global vendor diversification to markets like India.
While the imposition of reciprocal tariffs by the US government for imports from India could impact the profit margins (on a standalone basis), a likely improvement in the operating margins in subsidiaries would offset the impact to some extent. The company enjoys established relationships with reputed global apparel retailers in the markets of North America and Europe, as evident from repeat orders received and a steady increase in the wallet share with key customers, the rating agency said in its rationale.