Textile sector posts robust growth in Oct-Dec quarter: CAL Securities report

Business Report:

Despite industries have been facing intensified power and gas crisis, worker unrest, and economic uncertainty, most of the listed textile companies posted robust growth in both revenue and profit in the October-December quarter of FY25, driven by increased demand from the US and Europe, along with currency depreciation.

CAL Securities Limited, a prominent brokerage firm, recently published a research report titled “Textile Sector Update”, analysing the unaudited reports of 30 listed textile firms for the second quarter of this fiscal year.

According to the report, companies in the listed textile sector achieved robust year-on-year revenue growth of 20 percent, reaching Tk4,400 crore in the second quarter, with apparel exporters and spinning mills leading the way.

According to the segment-wise performance, apparel exporters spearheaded the surge with a 43.1percent year-on-year increase. Spinning mills, contributing nearly half of the sector’s revenue, saw a solid 23.5percent year-on-year growth, while dyeing recorded a 29.2percent growth, fabric grew by 11.4 percent, and denim secured an 8.3 percent growth.

However, the home textile segment saw a 2.4 percent decline in revenue during the second quarter, according to the research findings.

Moreover, textile firms posted a net profit surge of 72 percent year-on-year, driven by topline growth, leading to a 170-basis-point expansion in net profit margin.

The research report stated that listed textile companies reported a net profit of Tk220 crore in the second quarter, up from Tk130 crore a year ago. Net margins improved to 5 percent from 3.5 percent year-on-year, though elevated interest rates weighed on overall profitability.

CAL Securities noted that lower cotton prices primarily boosted their profitability.

The brokerage firm highlighted that the country’s readymade garment exports posted a 12 percent year-on-year growth in the first half of FY25, despite disruptions from political transitions and labour unrest.

Following a year of decline in FY24, exports rebounded in the first half of FY25, even surpassing FY23 levels. This recovery was fueled by increased demand from the US and Europe, bolstered by declining inflation and monetary easing in developed markets, the report added