Rising cotton prices may browbeat textile cos expectations
06 Jan '06
3 min read
“Such short term aberrations will be there in a commodities driven industry. But the sector still has a good potential,” he said. Arvind Mills' scrip fell from Rs 138.1 on October 3 to Rs 95.9 on January 5 while that of GTN Textiles dipped from Rs 75 to Rs 62.7 on NSE during the period.
Prices of Suryalakshmi Cotton nose-dived from Rs 484 in October 3 to Rs 222.9 on January 5, according to NSE data.
Acknowledging that margins will be under pressure due to the hike in cotton prices, industry sources said that if the trend continues it will affect bottomlines. “We achieved good profitability during the first six months of the fiscal. Now, we will not be able to sustain the momentum,” they said.
Sources said industry sources expect Q3 profits to come down substantially on a sequential basis signalling a downturn in the fortunes of the sector.
“A clear picture on the prospects for the next quarter will emerge only by the end of this month as we will have a much better idea of the crop situation by then. But we do expect a drop in profits for the third quarter.”
marketing@alchempro.com
