Vardhman Textiles Ltd (VTL) grabbed the attention of investors on Dalal Street, as they await the Punjab-based manufacturer and marketer of textile products to report its financial results for the April-June period this week.

Share Market Live

NSE

The Vardhman Textiles stock skyrocketed as much as 19.1 percent to Rs 318.1 apiece on BSE, snapping a four-day losing streak. The VTL stock was in high demand, with a total of 2.4 lakh shares changing hands so far on Monday as against a daily average of 20,000 in the past two weeks.

Easing cotton prices have boosted the prospects of profitability for the textiles maker, after it hit record highs in May on account of below-par production in several parts of the country. However, analysts are in a wait-and-watch mode to see a sustained drop in rates.

Analysts are divided over the stock, which has gradually fallen in the past few months. In March, the company split its shares into a ratio of 1:5.

ALSO READ: Should investors chase textile stocks?

This comes at a time when high input costs are hurting the margin of businesses across sectors. Analysts will track any big fluctuations in the company's margin — or a key metric of profitability — in its upcoming earnings report.

ICICI Direct analysts have a cautious outlook on the Vardhman Textiles stock. The brokerage has a 'hold' rating on the VTL stock with a target price of Rs 285 — which implies an upside of 6.7 percent from its closing level on Friday.

What analysts say

Textile companies that are better positioned on the balance sheet front will weather the challenging environment in the space, after demonstrating strong performances in the year ended March 2022, according to ICICI Direct.

The brokerage also has a 'hold' call on KPR Mills, Gautam Exim, Indo Count and Faze Three. It holds a cautious stance on the textile sector citing near-term headwinds, though it believes there is good long-term potential in the space.

Indian textile manufacturers have been losing market share in the US due to a slew of headwinds, including record high cotton prices, higher freight expenses and and piling up of inventories.

A reduced purchasing power in key export markets is likely to negatively

impact the order books of Indian exporters, as the current near-term headwinds outweigh the long-term structural story, according to ICICI Direct.

Catch latest market updates with CNBCTV18.com's blog

(Edited by : Sandeep Singh)