Investors are differentiating within the textile sector, rewarding companies that are reshaping their business models and positioning early for tariff relief and global supply-chain realignment, even if near-term earnings remain under pressure.
Year to date, Welspun has gained nearly 5.4% and Indo Count 8%, while Himatsingka and Trident share prices have dropped 4.4% and 1.7%, respectively.
Why the duo leads
Indo Count is de-risking its business by moving from a single product to a multi-product offering, thereby expanding the total addressable market from single to multi-location manufacturing facilities, including the US, said Sunny Agrawal, head – fundamental research at SBI Securities.
According to the company’s latest investor presentation, new businesses, comprising utility bedding and US brand business, have scaled meaningfully, with their share in consolidated revenue rising from 9% in Q3FY25 to 20% in Q3FY26.
Correspondingly, the contribution of bed linen, its core business, has declined from 91% to 80%, signaling lower concentration risk. The company aims to double revenue by 2028 and restore Ebitda (Earnings before interest, taxes, depreciation and amortization) margins to around 15%, after pressure from US tariffs and investments in new verticals.
Recent acquisitions and FTAs are likely to reflect on the company’s earnings going forward, analysts said.
Indo Count reported consolidated revenue of ₹1,074 crore in Q3FY26, down from ₹1,168 crore in the same quarter a year ago.
Meanwhile, Welspun said in its latest investor presentation that Q3 remained challenging, with US tariff headwinds and cautious customer ordering impacting demand visibility. As a result, EBITDA margin in the quarter came in at 7.7% from 12.6% in Q3FY25. The company posted sales of around ₹2,277 crore in Q3FY26, marking a nearly 10% on-year drop.
Still, Nuvama Institutional Equities believes FY27 to be a year of recovery for Welspun. With FTAs expected to materialize with the US, UK and European Union, the tariff burden that the company had been absorbing is likely to ease, paving the way for margin normalization by next year. Growth, which had been under pressure, should also pick up as these agreements go live, the brokerage firm said.
Nuvama has retained its ‘hold’ rating with a hike in target price to ₹147 from ₹135.
Welspun Living is among the largest global home-textile exporters (towels, bed linen, rugs, flooring), with strong tie-ups with marquee retail chains across North America, the UK and Europe. The company enjoys market leadership in towels and bath rugs globally, and stands at number two in bedsheets, Agrawal of SBI Securities added.
“Most of the major overhangs now seem to be behind the company,” Prerna Jhunjhunwala, vice president – textiles and retail at Elara Capital, said. With the heavy lifting largely done, the growth runway appears clearer, suggesting that the current rally could still have more legs, Jhunjhunwala added.
JM Financial Institutional Securities, which has maintained its ‘buy’ rating on Welspun, believes that multiple new markets opening on the back of free trade agreements (FTAs) and the Indian government’s focus on developing the textile ecosystem are likely to drive the company’s earnings trajectory.
For Himatsingka, the balance sheet is relatively stretched, margins are under pressure, and it may take time to meaningfully diversify from the US market. Agrawal believes the Street would prefer to see actual execution and tangible improvement before turning positive.
Meanwhile, revenue from the paper and yarn business collectively contributes 47% to Trident’s overall revenue pie in Q3FY26. Agrawal believes this mix means Trident isn’t a direct play on the US trade recovery. Instead, it’s more of a domestic consumption story, which explains why it didn’t really figure in investor watchlists.
Pricey valuations
Valuations, however, are not that cheap. Both Indo Count Industries and Welspun Living are trading at a sharp premium to their five-year average multiples.
Indo Count currently trades at around 29.65 times earnings, nearly double its five-year average of 15.76 times. To be sure, the shares have exhibited volatility over the past 15 days.
Welspun’s re-rating has been steeper, at 61.85 times versus its long-term average of 23.17 times, suggesting a lot of optimism is already priced in.
Himatsingka is currently trading at 11.31 times earnings, below its five-year average multiple of 12.90 times. Similarly, Trident is valued at 24.36 times, also lower than its long-term average of 34.46 times.
According to Bloomberg data, eight brokerage houses have a ‘buy’ recommendation on Welspun Living stock, whereas three have suggested ‘hold’. Indo Count has six ‘buy’ ratings and two ‘holds’.
Jhunjhunwalas believes the outlook for the sector is steadily turning positive, especially with multiple FTAs being signed. That said, the structure and final contours of the proposed India-US trade deal will be a critical near-term variable to watch, she added.
