The rise in operating profitability in fiscal 2024 would follow a sharp ~600-700 bps fall estimated for fiscal 2023 (in line with earlier forecast) to 10.5-11% — on a high base of fiscal 2022, when decadal-high spreads had spooled up profitability.

Yet operating profitability will remain below the pre-pandemic 5-year average of 12-13%.

Operating profitability1 of cotton yarn spinners is set to improve 100 basis points (bps) to 11-12% in fiscal 2024, despite an expected 10-12% on-year fall in revenue stemming from lower realisations and muted exports, according to rating agency CRISIL.

Yet operating profitability will remain below the pre-pandemic 5-year average of 12-13%.
 
The rise in operating profitability in fiscal 2024 would follow a sharp ~600-700 bps fall estimated for fiscal 2023 (in line with earlier forecast) to 10.5-11% — on a high base of fiscal 2022, when decadal-high spreads had spooled up profitability.
 
Credit profiles of cotton yarn spinners are seen stable following deleveraged balance sheets due to low capex in the past few fiscals, super-normal cash generation in fiscal 2022, and likely improvement in operating profitability in fiscal 2024, a CRISIL Ratings analysis of 101 cotton yarn spinners accounting for ~35% of the industry’s revenues, shows.