India Ratings & Research (Ind-Ra) has revised its outlook on the retail sector for FY15 to negative to stable from negative. Ind-Ra expects median EBITDA margins for FY15 to remain at levels observed thus far in FY14. Operational efficiencies translating into stable margins as seen in 1HFY14 would marginally improve credit profiles of most retailers from FY13 levels. For 1HFY14, the median operating margins improved by 87bp yoy. As such, FY13 was possibly the weakest period since FY10 for the retail sector with margins falling by 110bp from FY12. However, efforts by retailers to deleverage by monetising non-core businesses could be positive for the sector.
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