Mumbai: Ratings agency India Ratings (Ind-Ra) has maintained a stable outlook for the cotton and synthetic textiles sector for the rest of the current fiscal riding on the back of strong demand from end-users, the agency said in a report.
The agency has based its outlook observing a strong rise in private consumption expenditure pushing the demand for textiles up.
Also, with the Indian rupee falling to a record low against the US dollar, apparel exporters are poised to benefit.
"Ind-Ra expects the overall credit profile of the sector to gradually improve, as expected by the agency in February 2018.
The sector profitability is likely to improve gradually, with players passing on increased raw material prices to end-users, given the healthy demand, a depreciating rupee and waning impact of the structural issues," said a note by the agency.
"However, the positive impact of improved demand and profitability will be partly countered by sticky working capital requirements on the back of cost inflation and, thus, a steady reliance on debt," the agency added.
Prices are also expected to remain buoyant with decline in stock levels due to weak production as well as a likely rise in the minimum import price for cotton in the Indian cotton year beginning from September, 2018 to October next year.