Textile Stocks Skyrocket as India-US Trade Deal and Budget Fuel Sector Optimism
The share price of Gokaldas Exports surged over 18% on Wednesday, February 4, continuing its sharp upward trajectory after a 20% surge in the previous trading session. This remarkable rally has seen the textile stock skyrocket by approximately 43% in just two sessions, making it one of the market's standout performers.
Trade Deal Provides Immediate Boost to Textile Sector
The dramatic upswing in textile stocks comes as the sector emerges as one of the biggest beneficiaries of the newly announced India–United States trade arrangement. Under this agreement, reciprocal tariffs on Indian goods will be reduced to 18% from the previous 25%, while the extra 25% duty on imports of Russian crude oil will be removed.
US President Donald Trump confirmed that the agreement would take effect immediately, creating a positive sentiment shift for Indian textile companies that derive between 50% and 70% of their total revenue from the crucial US market.
Union Budget Adds Further Momentum with Mega Textile Parks
Adding to the sector's positive outlook, the recent Union Budget announcement regarding the establishment of Mega Textile Parks has further strengthened the investment narrative. Finance Minister Nirmala Sitharaman, in her Budget 2026–27 speech on Sunday, revealed that these parks would be developed in challenge mode with a focus on integrated infrastructure and value addition.
This initiative forms part of a broader five-pronged policy framework aimed at boosting India's employment-intensive textile industry. The proposed parks are expected to:
- Attract fresh investment into the sector
- Enhance compliance and traceability standards
- Create integrated hubs supporting scale, quality control, and exports
Gokaldas Exports Leads Textile Stock Rally
Gokaldas Exports rose as much as 18.5% intraday to hit a high of ₹827, building on its previous session's 20% jump. The company's stock performance has been particularly noteworthy, with the two-day surge representing one of the most dramatic moves in recent textile sector history.
Other textile stocks also experienced significant movement following confirmation of the India–US trade deal, though intraday performance on Wednesday showed mixed results across the sector:
- Kitex Garments jumped 14%
- Adhinath Textiles was locked in an upper circuit
- Trident gained over 3.5%
- KPR Mills traded largely flat
- Welspun Living declined more than 6%
- Vardhman Textiles slipped over 3%
- Indo Count Industries fell more than 2%
Recent Financial Performance Shows Mixed Picture
Despite the current market enthusiasm, Gokaldas Exports reported challenging Q3 FY26 results, revealing a sharp decline in profitability. The company's consolidated net profit fell 70.97% year-on-year to ₹14.61 crore, compared with ₹50.34 crore in Q3 FY25. Revenue from operations declined marginally by 0.92% YoY to ₹978.65 crore during the quarter.
The company noted that its India operations continued to show resilience, delivering 8% YoY growth despite facing the first full-quarter impact of US tariffs. However, uncertainty around the African Growth and Opportunity Act (AGOA) and supply chain disruptions weighed on its African business during this period.
EBITDA declined 18% YoY to ₹96 crore, while the EBITDA margin contracted by 202 basis points YoY to 9.7% in Q3 FY26. The company attributed the margin pressure mainly to the impact of US tariff rebates, though productivity improvements, a strong order book, and tighter cost management helped absorb part of the impact.
Market Experts Weigh In on Sector Prospects
Market experts believe the trade deal could provide a meaningful tailwind for Indian textile exporters, particularly those with high exposure to the US market. Anil Rego, Founder and Fund Manager at Right Horizons PMS, noted that the agreement could materially improve competitiveness for Indian exporters.
"For textiles, the impact is particularly significant given the US is one of the largest end markets for Indian apparel and home textiles," Rego explained. "Reduced tariffs enhance price competitiveness against peers such as China and Bangladesh, potentially leading to order diversion in India's favour. Higher volumes, better capacity utilisation, and operating leverage could gradually translate into margin recovery and more stable earnings for exporters."
Selective Opportunities in the Textile Space
However, experts caution that gains may not be uniform across the sector. Harshal Dasani, Business Head at INVAsset PMS, said the biggest beneficiaries are likely to be companies with strong execution, value-added offerings, and substantial US exposure. He expects export-focused apparel manufacturers to see faster order normalisation as US buyers diversify sourcing away from higher-tariff regions.
Dasani identified several potential beneficiaries of the trade shift:
- Gokaldas Exports as a direct play on US apparel demand
- Pearl Global Industries offering leverage to garment exports with improving scale
- Indo Count Industries and Welspun Living in home textiles, given their long-standing US retailer relationships
At the same time, he believes the opportunity is selective, noting that commodity-heavy yarn manufacturers may see limited upside as pricing gains tend to be competed away in more commoditized segments of the market.
The combination of favorable trade terms with the United States and supportive domestic policy initiatives has created a potentially transformative moment for India's textile industry, though investors are advised to consider both the opportunities and challenges within this evolving sector landscape.
