The recent closure of India’s transshipment route for Bangladeshi garment exports has opened up new opportunities for Indian garment manufacturers and exporters. Over the next two years, Indian companies with strong fundamentals, export focus, and scalable operations are expected to benefit from increased global apparel orders being redirected from Bangladesh. This report identifies key Indian listed companies likely to gain, analyzes their financial and operational strengths, and provides an outlook for potential investors.
Background: India has revoked a key transshipment facility that previously allowed Bangladesh to ship garments through Indian ports and airports, a route widely used for quick global deliveries. This decision is expected to lower congestion and freight costs for Indian exporters while creating delays and higher costs for Bangladeshi exporters. Additionally, Bangladesh is currently facing political instability and trade headwinds, pushing international buyers to seek alternative sourcing destinations, with India emerging as a leading contender.
Industry Tailwinds for India:
- Order Redirection: With delays in Bangladeshi logistics, global fashion retailers are turning to Indian manufacturers for fast, time-sensitive deliveries.
- Policy Support: India’s PLI schemes, MITRA parks, and favorable FTAs with several regions provide an enhanced business environment.
- Buyer Diversification: Geopolitical uncertainty and tariffs on Bangladeshi exports are prompting global buyers to diversify their sourcing strategies toward India.
- Capacity Expansion: Many Indian exporters are investing in capacity to absorb incremental demand.
Key Beneficiary Companies:
Large Cap:
- KPR Mill Ltd
- One of the largest vertically integrated garment exporters.
- Strong export revenue and expanding production capacity.
- Consistent revenue and profit growth, premium valuations.
- Arvind Ltd
- Leading in denim and woven fabric exports.
- Balanced domestic and export portfolio.
- Improving fundamentals, potential for higher utilization.
Mid Cap:
- Gokaldas Exports
- Export-focused, outerwear specialist.
- Aggressively expanding with a debt-free balance sheet.
- Strong profit growth and international client base.
- Trident Ltd
- Major home textile exporter.
- Diversified operations including paper and yarn.
- Scope for upside if order volumes rebound.
Small Cap:
- Pearl Global Industries
- Global operations with the ability to shift production.
- High ROE, strong export base, solid growth prospects.
- Kitex Garments
- Focused on infant apparel exports.
- Significant stock rally; expanding capacity in Telangana.
- Benefiting from time-sensitive order shifts.
- S.P. Apparels
- Exporter of kidswear to European brands.
- Reasonable valuations with improving margins.
- Potential to gain incremental orders from EU clients.
Summary Table:
| Company | Market Cap (INR Cr) | P/E Ratio | ROE (%) | Export Exposure | 1-Year Return (%) |
|---|---|---|---|---|---|
| KPR Mill | 33,300 | ~40 | ~18 | High | +18% |
| Arvind Ltd | 8,721 | ~29 | ~10 | Moderate | +8% |
| Gokaldas Exports | 5,600 | ~28 | ~13 | Very High | Flat |
| Trident Ltd | 13,300 | ~45 | ~8 | High | -35% |
| Pearl Global | 4,600 | ~22 | ~22 | Very High | +69% |
| Kitex Garments | 4,350 | ~35 | ~6 | Very High | +187% |
| SP Apparels | 1,750 | ~19 | ~11 | High | +30% |
Investment Outlook (2-Year Horizon): The closure of Bangladesh’s transshipment route and its ongoing internal issues are expected to structurally benefit Indian garment manufacturers. Indian companies are likely to see a sustained uptick in order flows, improved utilization, and better margins over the next two years.
Companies with spare capacity or plans to expand—like KPR Mill, Gokaldas Exports, and Kitex Garments—are positioned for strong earnings growth. While some valuations appear stretched, continued export growth can justify these levels. A diversified investment approach across market caps can help capture both stability and potential high returns.
Conclusion: India’s garment export industry is poised for a cyclical upswing. The combination of global order redirection, supportive government policy, and expanding production capacity positions Indian exporters favorably. Investors should monitor quarterly results, export order trends, and capacity additions as key indicators of sustained performance in this sector.
ArthaNiti 