The domestic textile sector is witnessing renewed market interest as analysts project sustained outperformance, gradual margin recovery, and higher order execution in the upcoming quarters. Prominent brokerage firm Motilal Oswal has released a detailed report highlighting a positive outlook for apparel and home textile manufacturers, identifying specific stocks that hold strong potential for investors looking at the sector.
Strong June Quarter Performance And Key Monitorables
During the June quarter, textile companies comfortably outperformed the broader market by delivering an impressive 18 percent annual growth. This notable expansion was largely driven by a favourable low base effect and accelerated order execution. However, market experts point out that cotton prices, government-backed export incentives, freight charges, and overall fuel costs will continue to remain critical monitorables for evaluating the sector's ongoing profitability.
Long-Term Historical Trends And Future Growth Projections
Looking at historical performance, the textile sector has traditionally traded at a 10-year mean of 24x P/E and 14x EV/EBITDA across the coverage universe, with topline, EBITDA, and PAT registering modest growths of just 6 percent, 4 percent, and 3 percent respectively over the past decade. Backed by significantly improved business visibility and demand revival, analysts project that the coverage universe will achieve a robust growth of 14 percent, 27 percent, and 38 percent respectively over the FY26-28 period.
Top Brokerage Picks And Valuation Premiums
Motilal Oswal has named Gokaldas Exports, Arvind Limited, and Indo Count Industries as its top stock picks in the sector. Reflecting confidence in their operational strength, the brokerage has assigned a 7 to 10 percent premium to the mean EV/EBITDA and P/E multiples. Within the apparel manufacturing space, preference is given to Gokaldas Exports and Arvind Limited, while Indo Count Industries stands out as the favored choice within the home textile space.
Gokaldas Exports share price opened marginally flat and was trading 0.03 percent higher at Rs 798.65 per share at 9:30 am. The textile stock had earlier closed at Rs 796.65 per share on Monday, August 24. Motilal Oswal has assigned a 'Buy' rating to the stock with an ambitious target price of Rs 1,110, indicating a potential 26 percent upside in its valuation.
Arvind Limited share price experienced fluctuating movement, trading 0.52 percent lower at Rs 534.05 per share during morning trades while also seeing higher traction in Tuesday's session. The brokerage has issued a 'Buy' recommendation on Arvind Limited with a target price of Rs 670 per share, which points toward an estimated 26 percent upside from current valuation levels.
Indo Count Industries stock closed at Rs 430.80 per share on the BSE on Monday and was later trading 0.81 percent higher at Rs 434.30 per share. Motilal Oswal has reaffirmed a 'Buy' rating on Indo Count Industries, setting a target price of Rs 550 per share, which highlights a promising 28 percent upside potential for investors.
