ICRA: Footwear industry revenues to keep growing till 2023

07 March 2022, Mumbai:

The revenues of India's footwear industry are expected to grow by 10 percent year on year to reach the pre-pandemic levels in FY23.

However, the performance of domestic footwear players is likely to remain muted in FY22 with the spread of Omicron variant shaving e up to 10 percent of the revenue in Q4FY22 compared to last fiscal, says rating agency ICRA.

According to ICRA, the financial position of large, listed footwear players is expected to remain strong with healthy on-balance sheet liquidity and low financial leverage.

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The credit metrics are expected to remain strong with interest coverage and total Debt/OPBDITA of '6.5x and 1.7x' respectively in FY22 compared to '4.2x and 2.4x' respectively in FY21 and would improve further in FY23.

Besides, the rating agency said that the prices of major raw materials -- Polyvinyl Chloride (PVC) and Ethylene-vinyl acetate (EVA) -- have increased substantially in the last year the impact of which was offset through price hikes to an extent.

The extent of concessions would markedly be lower in the current fiscal, indicating limited headroom for further reduction in the fixed cost, adds Gaurav Singla, Assistant Vice President, ICRA.

The industry’s operating margin is expected to return to pre-COVID levels by Q2FY23 with improved scale, adds Singla. 

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