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Crisil Ratings in its latest report has said softening input cost and rising demand will help the footwear industry to record an 11 per cent growth in revenue this fiscal (FY24). He stated footwear demand is seen clipping at 4 percent this fiscal. Moreover, it said domestic revenue is seen rising 10 per cent, driven largely by higher selling prices. This fiscal, the increase in average selling price will largely be due to a shift in the product mix towards higher-priced segments compared to price hikes initiated in the past to offset costlier raw materials.

It mentioned prices of key inputs such as ethylene vinyl acetate, rubber and resins have fallen 30 per cent in the past fiscal. Raw materials constitute around 45 per cent of the total cost of footwear makers. It added Softening input cost will boost operating margin by about 125 basis points to 9 per cent, which will still be below the pre-pandemic levels of 10 per cent.

The resultant healthy cash accrual and balance sheets will keep their credit profiles stable, as per the report that is based on an analysis of 43 footwear companies, which account for 15 per cent of the industry revenue of Rs 1 lakh crore. Exports, which constitute a fifth of the sectoral revenue, is seen slowing to 12 per cent this fiscal compared to a 25 per cent uptick last fiscal as high inflation cuts demand from Europe and the US, which account for three-fourth of the footwear exports. Last fiscal, exports grew as pent-up demand after the pandemic continued.