India’s hosiery sector is set to witness a 10-12 per cent revenue growth in FY ’24, fueled by a revival in rural demand, increased exports, and strong modern trade sales, according to CRISIL Ratings. Improved operating margins and reduced working capital requirements are expected to strengthen the sector’s financial stability.
A CRISIL analysis of 30 hosiery makers, representing a third of the industry by revenue, highlights that increased volumes will offset a 1-2 per cent decline in average sales realization. Softer input prices and higher capacity utilization are projected to enhance operating margins by 150-200 basis points.
Director of CRISIL Ratings, Argha Chanda, attributes the growth to strong rural sales, supported by higher agricultural yields, a hike in minimum support prices, and increased Government spending on rural infrastructure. Export demand from the Middle East and North Africa, coupled with growing urban consumption through modern trade channels, also adds momentum.
Inventory holding is expected to reduce significantly, improving liquidity. Meanwhile, stable yarn prices and controlled expansion plans will keep debt levels in check. Interest coverage ratios are projected to improve to 6.5 times this fiscal from 4.5 times last year.
The outlook remains optimistic, though factors like inflation and export dynamics will require close monitoring.
