Ind-Ra revises outlook on textile sector to negative

India Ratings and Research (Ind-Ra) has revised the textile sector's outlook to negative for FY21 from stable as weak domestic demand growth, threat of cheap imports and dwindling incentives and exports are likely to keep volumes muted.It, however, expects key raw material prices to remain low in FY21 after a correction in FY20, contributing to a modest recovery in margins, stable working capital requirements and steady cash flows.Ind-Ra expects cotton prices to stabilise with improved cotton supply and an inventory build-up in FY21. The industry adjusting to a low dealer inventory is becoming the new normal.Easing of the GST implementation issues might only provide modest support to demand growth unless liquidity improves. Liquidity remains chocked with a lack of bank funding and sluggish end-consumer demand.Ind-Ra said yarn production for FY21 is expected to remain muted with lack of visibility on wholesale demand. Sector consolidation will continue in FY21 while the mid and small ..