Ind-Ra assigns stable outlook for jewellery exporters for FY15

Says exporters are likely to report moderate revenue growth of 4-5% y-o-y in FY 2015

India Ratings and Research (Ind-Ra) has maintained a stable outlook on gems and jewellery exporters for FY 2015, while revising it on domestic retailers to stable from negative.

"The stable outlook for exporters is supported by expectation of modest demand growth in key export markets in FY 2015. Positive signs from export destinations such as higher disposable income and consumer spending as well as improvements in consumer confidence will support export volumes of gems and jewellery," Ind-Ra said in a report here.

Exporters are likely to report moderate revenue growth of 4-5% year-on-year in FY 2015, and operating margins in the range of 3.5-4%, it said.

The outlook for domestic retailers was revised due to the likely increase in volume demand of gold jewellery.

Ind-Ra expects gold prices to decline in FY 2015 and improve the margins of domestic players by 1-2% to the FY 2013 levels of 9%.

It further explained that the margins were impacted in 2013 due to a rise in domestic gold prices and the players had to offer discounts to attract customers.

Revenue in FY 2014 was driven by gold prices and not volumes.

Further, support to revenue could come from new store additions by existing players in tier II and tier III towns.

Ind-Ra expects domestic retailers to witness 3-8% annual revenue growth in FY14 and FY15.

The working capital days of jewellery retailers have consistently increased since FY2009, and a possible uptick in sales volume could reduce inventory levels.