Indian textile stocks, including major players like Raymond and Welspun Living, are experiencing renewed investor attention. The market buzz stems from the anticipation of a crucial policy decision: a potential extension of the customs duty exemption on raw cotton beyond its October 31 deadline, possibly until December.
This policy move is expected to offer much-needed relief to textile manufacturers grappling with elevated input costs. Such a measure could significantly improve investor sentiment across the sector, leading to a re-evaluation of textile companies' earnings outlook and profit margins.
Brokerage Insights Drive Textile Stock Momentum
Market analysts are actively assessing the implications of these developments. Rachit Khandelwal, Head Research & Investor Education at BNK Capital, highlighted the impact of the India-UK Free Trade Agreement, which came into force on July 15, 2026. He anticipates a substantial positive difference in revenue and margins for textile firms in the July quarter due to this agreement.
Khandelwal also provided a positive outlook for KPR Mill, suggesting a buying opportunity with target prices ranging from Rs 1200-1224, potentially reaching Rs 1360-1400 within 1.5 to 2 months if initial levels are surpassed.
Jefferies Initiates Coverage with 'Buy' Ratings
Global brokerage Jefferies has thrown its weight behind the sector, initiating coverage on both Welspun Living and Raymond Lifestyle with 'Buy' recommendations. For Welspun Living, Jefferies set a target price of Rs 260 per share, while Raymond Lifestyle received a target of Rs 900 per share.
According to Jefferies, India's textile industry is entering a structural growth phase. This growth is primarily fueled by a global shift in sourcing away from China and India's improving tariff competitiveness, largely due to new free trade agreements with key markets like the UK and the European Union.
Welspun Living Poised for Global Home-Textile Growth
Jefferies views Welspun Living as a prime beneficiary of the expanding global home-textile export opportunity, leveraging its established leadership in international markets. The brokerage projects Welspun Living's revenue to achieve a compound annual growth rate (CAGR) of 14% between FY26 and FY29E.
A recovery in margins is expected to significantly enhance profitability, with EBITDA and profit after tax (PAT) projected to grow at impressive CAGRs of 38% and 71%, respectively, during the same period. Return on capital employed (ROCE) is also anticipated to improve by approximately 13 percentage points, reaching 19%, reflecting the expected operational recovery.
Raymond Lifestyle Offers Attractive Risk-Reward
For Raymond Lifestyle, Jefferies identifies an attractive risk-reward profile, underpinned by the company’s strong leadership in branded textiles and the potential for a robust recovery in its apparel business. The brokerage forecasts a 23% CAGR in earnings per share (EPS) for Raymond Lifestyle over FY26-FY29E.
Valuation also remains supportive, with the stock trading at around six times one-year forward EV/EBITDA, which Jefferies considers appealing. Overall, the combination of favorable global sourcing trends, enhanced tariff competitiveness, stronger earnings growth, and attractive valuations is expected to bolster the investment case for both these textile stocks.