India’s organised apparel retail sector is expected to record revenue growth of 12-13% this fiscal, slightly lower than the 15% growth reported last fiscal, as consumers diversify discretionary spending beyond apparel, according to an analysis by Crisil Ratings of 41 organised apparel retailers, representing around 28% of the organised apparel market.
Growth is expected to be supported by strong demand for value fashion, expansion of organised retail beyond large cities and sustained demand for branded apparel. However, rising cotton prices and elevated operating costs are likely to be only partially passed on due to intense competition, resulting in operating margin compression of around 100 basis points to nearly 14%.
Value-fashion/fast-fashion and mid-premium segments, largely priced below Rs 2,500, account for around two-thirds of sector revenue. Value fashion has grown more than twice as fast as other segments over the past three fiscals, increasing its revenue share to 46% from 39%.
According to Anuj Sethi, Senior Director, Crisil Ratings, Value fashion has emerged as the key growth driver for organised retailers.
He added that its growth reflects rising aspirational consumption among price-conscious consumers, wider choice at lower price points and deeper penetration into smaller cities.
Revenue growth remained in the high single digits between April and August 2026, driven mainly by value fashion. The festive season, which typically contributes nearly 35% of annual apparel sales, will be critical to the sector’s outlook.
Physical stores remain the primary growth driver, with retailers expanding into tier-II and tier-III cities. Revenue per square foot has remained around Rs 11,000 over the past three fiscals, while same-store sales growth remains subdued, said Poonam Upadhyay, Director, Crisil Ratings.
Capital expenditure is expected at around Rs 2,500 crore this fiscal. Average gearing is projected at around 1.3 times, while interest cover is expected at about eight times. Inventory discipline, faster replenishment and calibrated expansion are expected to support credit profiles.
