Following a flattish H1, the trickle-down
effect of US tariff on cotton spinners is
expected to moderate the domestic
cotton yarn realisation in H2 FY2026.
Revenues of cotton spinners to decline
by 4-6% in FY2026 and margin
contraction likely to be 50-100 bps.
Moderation in cotton prices to offset the
impact to an extent.
Any positive developments around the
ongoing tariff-related negotiations with
the US could help soften the impact to
an extent.
Exhibit: Comparison of Indian cotton yarn prices with international prices
Source: YarnsandFibres.com, ICRA Research