Pakistan value-added textile exports touches $2.3bn in Q1 of fiscal year

Pakistan value-added textile exports has witnessed growth by 10pc touching $2.3bn in the first quarter (July-September) of this fiscal year compared with $2.1bn a year ago. While on the other hand, spinning-based exports (non-value added) continue to decline by 15pc to $1.2bn from $1.4bn which were offset by higher exports of valued-added segment (bedwear, knitwear and readymade garments) as per the latest data released by the State Bank of Pakistan.

The increase in the value-added segment was modest. But better figures could be expected in the next quarter on the back of expected hike in international demand, particularly during the Christmas season, according to analyst S.M. Jawad Shamim at brokerage Taurus Securities, the provision of GSP+ status, value-added segment has outweighed the fall in the spinning sector to some extent.

Meanwhile, brokerage Foundation Securities in its report said that according to numbers released by the Pakistan Bureau of Statistics (PBS), textile exports in September 2014 stood at $1.25bn, reflecting a growth of 25.5pc over the previous month and 1.2pc year-on-year.

Export of bedwear and knitwear has surged by 34pc and 27pc in September over August on a month-on-month basis. Improved demand from China was thought to be a major factor behind the increase in export volumes of basic textiles.

Analyst Fahad Irfan at Foundation Securities is of the opinion that the improvement in sector dynamics have already been priced in (the stock values), which spells limited upside for textile players.

The textile sector can benefit from exchange gains in the short term and the major impact of lower cotton prices could be seen in the second quarter (October-December) of FY15.

Also the trend of diminishing growth could continue for a foreseeable future as political turmoil and floods could impinge on the export numbers in the coming months.

Local cotton prices also reflected the downfall despite flash floods and this is likely to mark higher profit margins for the textile players from October-December quarter onwards,