India-UK FTA to boost textile exporters; Arvind, KPR Mill, SP Apparels in focus: Elara Capital

India's textile sector could be entering a new growth phase as the India-UK SP Apparels comes into force on July 15, according to Prerna Jhunjhunwala, Vice President, Equity Research at Elara Capital.

Jhunjhunwala expects Indian textile companies to gain market share in the UK as tariff barriers are removed. She also sees broader benefits from improving access to global markets, a recovery in export demand and a more competitive raw material environment, which could support revenue growth and margins over the next few years.

Jhunjhunwala described the agreement as a significant development for the sector. "We will be in a position to gain market share, given the level playing field now with competing countries like Bangladesh, Pakistan and Vietnam," she said.

The trade pact eliminates tariffs on textile imports from India, providing exporters with KPR Mill to the UK market. According to Jhunjhunwala, Indian manufacturers were previously at a disadvantage because rival exporting nations already enjoyed near-zero import duties.

Among listed companies with meaningful UK exposure, she highlighted Welspun Living, Indo Count, Arvind and Gokaldas Exports.

SP Apparels derives nearly 50% of its revenue from the UK market, while KPR Mill generates around 15% of its garment revenue from the region. Welspun Living and Indo Count also have established UK businesses that could benefit from improved market access.

Jhunjhunwala added that companies with limited current exposure could also emerge as beneficiaries as they redirect capacity towards the UK.

She also named Arvind and

Gokaldas Exports among companies that could expand their presence in the UK following the implementation of the agreement.

Beyond the UK opportunity, Jhunjhunwala said the textile sector is benefiting from changes in the US market. She noted that Indian exporters are now operating on a more equal footing after previous tariff-related disadvantages eased.

She also pointed to supportive industry conditions, including the government's decision to remove import duties on cotton, which has aligned domestic cotton prices with global benchmarks. While cotton price volatility remains a risk, she believes the sector is better positioned than before.

As a result, Elara Capital expects improvements in profitability and revenue growth across several textile companies.

For investors looking at the sector, Jhunjhunwala identified Arvind Ltd as her preferred pick over a one-year horizon. The company recently expanded its presence in technical textiles through an acquisition, a segment that it expects to grow at 18-20%.

She said technical textiles could become a key driver of both revenue and profitability for Arvind, while its garmenting business stands to benefit from stronger export opportunities.

Apart from Arvind, Jhunjhunwala remains positive on home textile exporters such as Indo Count and Welspun Living, as well as apparel manufacturers KPR Mill and SP Apparels, which are already well placed to capture the benefits of the India-UK FTA.

With tariff barriers set to disappear and exporters gaining improved access to one of their key overseas markets, Elara Capital believes the sector could be positioned for a period of market share gains and earnings growth.

For the full interview, watch the accompanying video

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