Indian Retail Braced For Subdued Q2 As Festive Shift Hits Apparel
Value retail and premium footwear offset delayed festive demand and input cost headwinds, reports Elara Capital
Indian consumer discretionary retail companies are projected to deliver an aggregate revenue growth of 11.8 per cent year-on-year in the second quarter of FY27, even as an unfavourable calendar shift and lingering raw material inflation weigh on the apparel segment. Operating profit (Ebitda) across the sector is forecast to expand by 12.7 per cent, underpinned by strong performances in value retail, footwear, and innerwear.
According to a quarterly preview report by Mumbai-based brokerage Elara Securities, the shift of the festive season into the third quarter has sharply curtailed demand for traditional and mid-market apparel.
Navratri, which commenced on 22 September in 2025, moves entirely into the October quarter this fiscal year, compounded by the pre-festive Shraddh period that delayed consumer purchases late into September.
Festive Distortion Weighs on Apparel
The resulting calendar distortion has left the broader apparel category facing an estimated 3.8 per cent contraction in revenue and a 5.0 per cent drop in Ebitda, dragged down by operating deleverage and higher input prices.
Ethnic and specialised retailers are bearing the brunt: bridal and celebration wear specialist Vedant Fashions is expected to report a 5.6 per cent drop in revenue to Rs 2,483 million alongside an 8.0 per cent fall in adjusted profit after tax (PAT), while Go Fashion is projected to post a 1.6 per cent revenue drop and a 26.9 per cent decline in adjusted earnings. Same-store sales growth (SSSG) for both firms remains anaemic at 1.0 per cent and -0.6 per cent respectively.
Value Formats Defy Broader Slump
In contrast, value and mass-market formats continue to display robust momentum. Budget department chain Vishal Mega Mart is forecast to post a 17.5 per cent year-on-year rise in revenue to Rs 35,032 million, propelled by 6.0 per cent SSSG and an aggressive rollout of 25 new stores during the quarter. Adjusted PAT for the retailer is slated to increase by 17.7 per cent to Rs 1,793 million.
Footwear Gains on Premiumisation
The footwear sector is likewise maintaining resilient expansion, supported by brand premiumisation and disciplined price increases. Aggregate footwear coverage is tracking an 8.8 per cent top-line increase and 10.0 per cent Ebitda growth.
Metro Brands leads the cohort with an estimated 13.2 per cent revenue increase and a 21.9 per cent rise in adjusted profit, while Campus Activewear is pencilled in for a 30.7 per cent surge in adjusted profit. Bata India is seen delivering modest revenue growth of 3.5 per cent, though lower discounting and strict cost controls are expected to drive a 37.5 per cent rebound in adjusted net earnings.
Margin Squeeze in Innerwear and Luggage
Elsewhere, innerwear brands are riding volume recoveries despite margin squeezes caused by the consumption of high-cost cotton inventory. Market leader Page Industries is projected to deliver an 11.8 per cent top-line improvement, aided by product introductions and price hikes flowing through the supply chain.
In luggage, Safari Industries and turnaround candidate VIP Industries are expanding sales by 11.0 per cent and 10.8 per cent respectively, though elevated promotions, advertising outlays, and crude-linked polymer resin costs continue to compress operating margins.
Overall sector Ebitda margins are forecast to tick up by 13 basis points to 15.5 per cent, as gains from operating leverage across scaled players compensate for cotton and petrochemical inflation. Elara Capital identified Metro Brands, Campus Activewear, and Vishal Mega Mart as its top picks across the coverage universe.