Textile stocks: Target prices for Arvind, Welspun Living, KPR Mill as US tariffs kick off

The US administration's decision to implement a 50 per cent tariff on imports from India, effective August 27, 2025, has raised significant concerns for Indian textile exports. Antique Stock Broking reports that the cumulative tariff burden on textile and apparel exports to the US could reach approximately 62-65 per cent, potentially making exports unviable for Indian companies. Lower competing tariffs in countries like China, Bangladesh, and Vietnam position India at a competitive disadvantage in the US market.

Antique Stock Broking, in its latest note, highlights the impact of these tariffs on key Indian textile firms. It expects Indian exports to remain impacted unless the country concludes a trade deal with the US. In its coverage companies, Arvind Ltd and Welspun Living have US exposure of 38 per cent and 60 per cent respectively.

"We downgrade Arvind to 'Hold' with a revised target price of Rs 330 (previously Rs 453), given the higher tariffs, and continue to maintain 'Hold' on Welspun Living and KPR Mill with a target price of Rs 132 (previously Rs 155) and Rs 1,055 respectively," it said.

India's textile exports are heavily skewed towards the US, with the country being the largest market, accounting for 28 per cent of total exports, valued at approximately $10 billion. Indian garments and home textiles contribute significantly to this figure. The imposition of higher tariffs could disrupt this longstanding trade relationship, impacting the financial outlook of major exporters.

The brokerage anticipates a challenging environment for Indian exporters until a trade deal is finalised. Prior tariffs of 25 per cent imposed earlier were somewhat manageable for retailers, but the additional 25 per cent is seen as untenable. The increased tariffs are likely to shift orders to competing nations with lower tariffs, thereby affecting the volume of textile exports from India.

To mitigate the impact, Indian exporters are expected to diversify their revenue streams and realign manufacturing. Recent free trade agreements with the UK, Australia, and the UAE are anticipated to aid this transition. Companies like Gokaldas Exports and Welspun have already begun shifting focus, with increased sales in the EU and UK markets.

Arvind Ltd aims to double its UK revenue, while Welspun's non-US share has reached 40 per cent. Despite these efforts, the scope for compensating losses through diversification remains limited. The Indian government's indirect measures, such as GST reforms and cotton import duty exemptions, are unlikely to offset the impact of US tariffs significantly.

The textile industry must navigate these tariffs amidst a labour-intensive and low value-addition sector. Orders set for post-September are reportedly on hold, awaiting further developments. Companies may need to explore overseas manufacturing shifts to counter the higher tariffs, although this strategy faces limitations.

The future of Indian textile exports to the US hinges on trade negotiations between the two countries. Until a favourable agreement is reached, Indian exporters will face a challenging landscape, needing strategic adjustments to maintain competitiveness.