High costs can dent profitability of apparel exporters in FY23: Report

Higher raw material and logistics costs could dent profit margins of apparel exporters this year, according to a report.

Domestic rating agency Icra said there has been a sharp surge in yarn prices since September 2020, which has touched an all-time high during May-June this year.

"We expect large-mid-scale apparel exporting companies to report a healthy growth in revenues in FY'23. While high realisations are expected to support the revenue growth for the year, higher raw material and logistics costs could dent apparel exporters' profitability for the year," Icra Senior Vice President and Group Head, Corporate Sector Ratings, Jayanta Roy said.

The report also said apparel exporters are likely to witness 14-15 per cent revenue growth this fiscal.

About demand, Icra stated that it has remained encouraging so far.

Citing examples, it said apparel imports by the European Union and the US, which account for 55 per cent of the global apparel trade, grew by 20 per cent year-on-year in the first five months of 2022.