Revenues of Indian apparel exporters are expected to have moderated sequentially due to a slowdown in demand amid concerns about recession in key markets. So says rating agency ICRA.

The sector has reported healthy revenue growth and profitability in the past four quarters, surpassing pre-Covid levels. While high realisations are expected to support revenue growth for the year, higher raw material and logistics costs could dent apparel exporters’ profitability for the year.

For fiscal year 2023, a topline growth of 15 per centis expected for apparel exporters with a slight moderation in margins by 100 bps to 300 bps amid sustained high raw material prices for a large part of the year and higher logistics costs.While raw material cost pressures remain, the stability of export incentives together with the benefits of increased scale helped companies maintain profitability so far.

Overall, the moderation in profits in fiscal 2023 is expected to adversely impact the coverage metrics of apparel players.Even as concerns about growth are increasing due to geopolitical tensions and sustained inflationary pressures, the demand trend has remained encouraging so far. In fiscal 2022, Indian apparel exporters’ turnover rose by 41 per cent and a 300bps improvement in operating margins, following a 16 per cent revenue decline in fiscal 2021.