India’s B&M retail sector to grow by 25% next fiscal: CRISIL Ratings

Driven by broad-based revival in demand, increased footfall and resurgence in consumer spending, India's organized brick and mortar) retail sector is likely to grow 25 per cent to Rs 5.7 lakh crore next fiscal. A study of 145 brick and mortar retailers by CRISIL Ratings estimates growth will ride on low base as revenues are likely to decline 19-22 per cent this fiscal due to the pandemic. However, sales recovered to over 80 per cent of pre-pandemic levels in the third quarter and are expected to recover almost fully by the close of the current quarter.

As per an Economic Times report, operating profits are also expected to recover sharply next fiscal. Along with higher revenue, this will enable a recovery in cash accruals, benefitting debt metrics and consequently stabilizing credit profiles in the sector. Healthy business performance will enable liquidity and debt metrics to recover next fiscal, lending stability to the credit profile of brick and mortar retailers. With capital spending on new stores expected to be gradual, leverage reflected in debt/EBITDA is likely to recover to below two times next fiscal, from over four times in fiscal 2021, says Sushant Sarode, Associate Director, CRISIL Ratings.