ICRA stated in a news release that a modest recovery in apparel export earnings, with an increase of about 8–9 per cent, is anticipated.
The need for stock replenishment in the US and EU regions is what is predicted to cause the resurgence. According to the release, the retail garment brands in the US and EU, which together account for over 55 per cent of the global apparel trade, are anticipated to book their orders for the summer 2024 season in H1 FY 2025 and liquidate their significant inventory build-up.
“After a nominal decline in revenues in FY 2024, ICRA expects the apparel-exporting companies to report a recovery in FY 2025 on a lower base, with replenishment of stock in the US and the EU regions,” said Priyesh Ruparelia, vice president and co-group head, corporate sector ratings, ICRA.
For the majority of players, a challenging operating climate has delayed major capital expenditures. Nonetheless, ICRA stated that it anticipates a rise in capital expenditure expenditures in FY 2025 due to the assumption of a demand resurgence in that year and the industry players’ plans to capitalise on the China Plus One movement. According to the statement, the only direct financial impact of the Red Sea battle on clothing exports has been a 15-day delay in shipments.
The research further stated that by offering scale benefits and enhancing India’s position in the MMF supply chain, the PM Mega Integrated Textile Region and Apparel (MITRA) programme will increase the nation’s influence in the global apparel sector.
Moreover, the release said that the operating margins of apparel exporters may moderate to 9.8-10 per cent in FY 2024 against 11.3 per cent in FY 2023 due to a relatively weaker operating performance in the 9 months of FY 2024 and contraction in volumes leading to a decline in operational efficiencies.