Mumbai, Jan 30 (PTI) India’s textiles sector may see higher growth following robust domestic demand and depreciating rupee value, a report said. Also Read - IPL 2021 Auction Live Updates List of Released/ Retained Players: CSK Retain Suresh Raina; Release Kedar, Chawla, Vijay

India Ratings has maintained a stable outlook for the textile sector for 2019-20 following strong domestic demand, waning impact of the disruptions due to GST and demonetisation and rising exports aided by a weak rupee. Also Read - KGF 2 actor Yash And Wife Radhika Pandit Are Vacationing in Tropical Island of Maldives- See Pics

The textile companies are likely to improve cash-flow from operations for FY20, as their working capital would stabilise as challenges related to demonetisation and the GST subside, Ind-Ra report said. Also Read - Delhi Woman Attacked With 'Acid' by Husband After She Refuses to Back to His Village

The sector is also likely to continue deleveraging gradually in FY20 in view of strong annual growth generation and some moderation in the debt level.

The liquidity of the majority of players in the sector is likely to remain adequate, alongwith an improvement in operational cash generation, backed by steady raw material costs and strong demand from end-user segments, it added.

Ind-Ra expects the domestic and global stock-to-use ratios to remain under pressure during cotton year 2018-19.

The agency said global cotton production is likely to decline in cotton year 2018-19 owing to a low acreage and adverse weather conditions in key cotton-growing nations.

Domestic cotton price moderated to an average rate of Rs 128 per kg during the third quarter of FY19 from the average level of Rs 134 per kg during the second quarter of the current year.

While expectations of a high acreage during cotton year 2019-20 narrowing global production gap could keep prices range-bound.

China’s cotton production continues to be much lower than its consumption. Its cotton deficit was increasingly met through imports over the last three years.

With its cotton reserves declining, the sensitivity of global cotton prices to China’s cotton policies have increased in the past few quarters. Any decision by China to further increase imports could lead to a rise in global cotton prices.

Meanwhile, the India’s textile exporters are likely to continue to benefit from improved cost competitiveness due to a weak rupee, which would drive volume growth.

Over the first nine-month of FY19, the Indian rupee depreciated at a higher rate against the US dollar than the currencies of key apparel-exporting countries like Vietnam and Bangladesh.

India’s apparel exports also showed signs of recovery in the third quarter of FY19 and are likely to rise in FY20 after remaining weak for three years, the report said.

This is published unedited from the PTI feed.