The Indian readymade garment (RMG) makers are likely to witness revenue growth of 10 per cent in this calendar year, mainly driven by healthy domestic demand and 10 per cent growth in exports, the report said. Crisil Ratings expect revenue growth of RMG makers to accelerate 300 basis points (bps) to 10 per cent in calendar 2019 (CY), compared with 7 per cent in CY2018, riding on robust domestic demand and a spurt in exports. Higher revenue growth will provide the benefit of operating leverage and will help improve profitability, it said adding that profitability of exporters is also aided by favourable exchange rate and restoration of incentives, resulting in better cash generation, which will improve the credit profiles of RMG firms this fiscal. Domestic sales logged an annual growth rate of 9.6 per cent in the five years through CY2018 to Rs 4.83 lakh crore, which was 80 per cent of the sector’s revenue. Exports growth will benefit from a likely depreciation in the rupee against the dollar, a partial restoration of export incentives recently and a pick-up in growth in the United Arab Emirates, the third-largest exports destination after the US and the European Union, the report said.

(Moneycontrol)