IND-AS boost for retailers in Q1 even as consumption slowdown weighs

Excluding impact of new lease accounting norms, some companies witnessed a 90-340 basis point y-o-year contraction in EBITDA margin while gains were limited for others

Even as the overall consumption slowdown weighed on the performance of consumer players in June 2019 quarter (Q1), the new lease accounting standard (IND AS 116) helped many companies at the operating level. Restaurants, retailers or companies having store formats emerged as major beneficiaries in the consumer pack.

A study of 10 such listed companies shows that IND AS 116 propelled EBITDA (earnings before interest, tax, depreciation and amortisation) margin by a sharp 560 basis point (bp) on an aggregate level—the minimum gain being 90 bp, and the maximum being 1,070 bp. EBTIDA, too, got inflated by close to Rs