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Business Standard
3 days ago
- Business
- Business Standard
Shrimp export volume growth to stay flat in FY26 due to US tariffs: Crisil
Indian shrimp exporters are expected to register a marginal 2–3 per cent rise in revenues in FY26, driven by higher prices and currency gains, according to a Crisil Ratings report. However, export volumes are likely to remain flat due to anticipated US tariff hikes and weak demand in key markets amid sluggish economic growth. Margins under pressure despite value addition efforts The Crisil report notes that operating margins will remain under strain, as the increased tariff burden will be passed on only gradually and partially. While exporters are exploring new markets and enhancing value-added products, these initiatives may take time to improve profitability. The report highlights that extended working capital cycles will increase exporters' dependence on external borrowings, impacting credit profiles. Nevertheless, capital structures are expected to remain stable. Market share and demand outlook Crisil's analysis of 63 shrimp exporters, representing around 55 per cent of the industry's revenue, supports this outlook. Global shrimp demand has stayed steady at roughly 4 million tonnes over recent years and is expected to remain subdued this fiscal year due to weak economic growth in major importing regions such as the US, EU and China. India holds about a fifth of the global shrimp market, with domestic production forecast to stay flat at 1.2 million tonnes. Low global prices have discouraged farming expansion this year. US tariffs and competition from South America India exports nearly 48 per cent of its shrimp to the US. Although the US has temporarily paused reciprocal tariffs, these reliefs primarily benefit South American exporters such as Ecuador, the world's largest shrimp supplier. Indian exporters are expected to face stronger competition in low-value-added segments such as raw, frozen and peeled frozen shrimp, which offer lower profitability. Himank Sharma, director at Crisil Ratings, said, 'Last fiscal was challenging for Indian shrimp exporters due to price pressures and US countervailing duties. With the US imposing reciprocal tariffs this year and sluggish demand from other key markets, revenue growth will likely remain in low single digits despite improved realisations.' Competitive edge in value-added products Low-value-added shrimp exports are expected to face rising challenges. However, Indian exporters maintain a competitive advantage in value-added products compared to Asian peers such as China, Vietnam, Thailand and Indonesia, who control over a third of the US market despite higher tariffs. Value-added products currently account for about 10 per cent of India's shrimp exports, but this share could rise to 15–17 per cent over the next 2–3 years, benefiting from tariff advantages, according to the report. Despite growth in value-added segments, limited volume expansion and tariff pressures are expected to reduce profitability by 50–60 basis points this fiscal year, bringing margins down to around 6.5–6.7 per cent, after a 70 basis point decline last year. Profitability and credit profile outlook Working capital cycles may lengthen as exporters face higher inventories and slower collections amid weak demand. This will lead to increased working capital borrowing alongside long-term debt for capital expenditure on value-added products, while capacity utilisation remains moderate. Nagarjun Alaparthi, associate director at Crisil Ratings, said, 'Debt levels will rise but capital structures will stay healthy. However, lower profits and higher interest costs will reduce interest coverage ratios. Gearing is expected to remain comfortable at 0.5 times by March 2026, slightly up from 0.46 times in March 2025, while interest coverage may ease to around 4.3 times in fiscal 2026 from 4.8 times last year, reflecting margin pressure.' The final impact of reciprocal tariffs, revisions to US anti-dumping and countervailing duties, their effects on demand, and forex fluctuations remain critical factors to monitor for the sector's outlook.
Hans India
3 days ago
- Business
- Hans India
Indian shrimp exporters to see 2-3 pc uptick in revenues this fiscal
New Delhi: Indian shrimp exporters will see a marginal 2-3 per cent uptick in revenues this fiscal (FY26) on improved realisations stemming from rising prices and currency gains, a Crisil report said on Friday. Though the low-value-added shrimp exports will likely see increased pressures, Indian exporters have a competitive advantage in the value-added segment over other Asian peers, such as China, Vietnam, Thailand and Indonesia, which face higher tariffs but enjoy over one-third market share in the US. However, export volumes will be flat because of higher tariffs expected to be imposed by the US and subdued demand in key importer nations as sluggish economic growth affects disposable incomes. India exports close to 48 per cent of its produce to the US. The reciprocal tariffs announced by the US, though paused for the time being, will benefit south American exporters such as Ecuador, the largest shrimp exporter in the world. Indian exporters will face higher competition from them in the raw frozen and peeled frozen categories, which have low value addition and are less remunerative. According to the report, operating margins will be under pressure because the tariff burden will be passed on only partially and gradually, as seen in the past, even as exporters scout for other markets and improve offerings through value addition. Credit profiles will continue to face challenges as elongated working capital cycles induce further recourse to credit lines that, in turn, would moderate debt protection metrics. Capital structures are expected to remain comfortable, however, the report mentioned. 'Last fiscal, the waters turned choppy for Indian shrimp exporters as prices and competition increased after a countervailing duty of 5.77 per cent was slapped by the US,' said Himank Sharma, Director, Crisil Ratings. This fiscal, with the US imposing reciprocal tariffs -- even as other major markets such as the European Union and China see sluggish economic activity -- exporters will likely see flattish demand. 'But as realisations tick up, overall growth in revenues should be in low single digit this fiscal,' Sharma added. Global shrimp demand has flatlined at 4 million tonne (MT) over the past few fiscals and will likely remain subdued this fiscal, too. Indian exporters have around a fifth of the global market share as of now, while domestic production is seen flat at 1.2 MT due to non-remunerative global prices impacting shrimp culture and growth, this fiscal. Nagarjun Alaparthi, Associate Director, Crisil Ratings, said that 'Despite rising debt, the capital structures of shrimp exporters will remain healthy'.
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Business Standard
15-05-2025
- Automotive
- Business Standard
PV dealers likely to post 7-9% revenue growth in FY26: Crisil Ratings
India's passenger vehicle (PV) dealerships are projected to register revenue growth of 7–9 per cent in FY26, a 100 basis point improvement over the previous fiscal, said ratings agency Crisil. The uptick is expected despite only modest gains in vehicle realisations and elevated inventory levels lingering from last year. Crisil's analysis of around 110 PV dealers reveals that while the sharp post-Covid rebound has moderated, the sector is still benefiting from steady volume recovery and improved profitability. Volume growth for the fiscal is pegged at 4–6 per cent, supported by continued consumer preference for SUVs and stable rural demand, especially for small cars. 'Increasing urban disposable incomes due to revised tax slabs, lower interest rates, and benign inflation, coupled with the sustained popularity of SUVs, will drive urban demand. Rural sales are likely to benefit from a normal monsoon and improved farm incomes,' said Himank Sharma, director, Crisil Ratings. Realisation growth is estimated at 3–4 per cent, driven by price increases by original equipment manufacturers (OEMs) and a tilt towards higher-priced SUV models. Urban markets, which contribute nearly two-thirds of annual PV demand, are expected to grow in tandem with rural markets this fiscal. Operating profit margins, which dipped by 30–35 basis points last fiscal, are likely to rebound to 3.2–3.4 per cent in FY26. This recovery will be powered by reduced discounts and better ancillary income from higher-margin services such as motor insurance, accessories, servicing, and spares. These segments are now expected to contribute 11–13 per cent to overall revenues, up from around 10 per cent in recent years. 'Improved visibility in high-margin segments and a decline in year-round discounts will support margin expansion,' the report said. Inventory levels had surged to 50–55 days in FY25—well above the normal 30–35 days—as OEMs aggressively pushed stock amid slower retail sales. Dealers are expected to correct inventory by 5–10 days this fiscal, though it will remain above pre-FY24 norms. 'With only moderate inventory correction and limited capex planned for showroom expansion, dealer debt levels are likely to decline slightly,' said Ankita Gupta, associate director, Crisil Ratings. Gearing is projected to improve to 1.0–1.1 times by March 2026 from the peak of 1.2 times as of March 2025. Interest coverage is expected to rise to 3.0–3.2 times, compared with 2.9 times in FY25—indicating stable credit profiles across the industry. Crisil highlighted that while the outlook for the sector remains stable, the trajectory will depend on factors such as the pace of retail recovery, further inventory push by OEMs, and the interplay of urban–rural demand trends. With the effects of pandemic-era volatility fading and the sector entering a more normalised growth phase, dealers appear better positioned in FY26—albeit with watchful eyes on margins, inventory, and rural sentiment.
Time of India
15-05-2025
- Automotive
- Time of India
Passenger vehicles dealership industry likely to grow by 7-9% this fiscal on tax sops, low inflation: Report
Domestic passenger vehicle dealership industry is likely to see a 7-9 per cent growth this fiscal driven by lower tax slabs and interest rates and benign inflation, ratings agency Crisil said on Thursday. It also said that the industry is likely to see around 100 basis points year-on-year increase in revenue supported by a modest revival in sales volume even as realisations remain rangebound. While a tad better than last fiscal, growth has eased from the strong post-Covid-19 rebound seen up to fiscal 2024 as volume growth normalized, it said. Moreover, dealers saw their inventory rise to 50-55 days last fiscal from the normal 30-35 days as retail sales slowed and OEMs sent stock aggressively to push sales numbers, the rating agency said, adding that while improved demand will result in inventory correction by 5- 10 days this fiscal, it will remain higher than the average levels seen prior to fiscal 2024. Play Video Pause Skip Backward Skip Forward Unmute Current Time 0:00 / Duration 0:00 Loaded : 0% 0:00 Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 1x Playback Rate Chapters Chapters Descriptions descriptions off , selected Captions captions settings , opens captions settings dialog captions off , selected Audio Track default , selected Picture-in-Picture Fullscreen This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Opacity Opaque Semi-Transparent Text Background Color Black White Red Green Blue Yellow Magenta Cyan Opacity Opaque Semi-Transparent Transparent Caption Area Background Color Black White Red Green Blue Yellow Magenta Cyan Opacity Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Drop shadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. "Increasing urban disposable incomes backed by a revision in tax slabs, interest rate cuts and benign inflation, and sustained popularity of SUVs, will fuel urban demand for passenger vehicles . In the rural segment, sales of small cars could see an uptick on expectations of a normal monsoon and improved farm incomes amid higher minimum support prices. Consequently, we see the industry growing at 7-9 per cent this fiscal," said Himank Sharma, Director, Crisil Ratings . Improvement in volume will benefit dealers in two ways-- first ancillary income will rise while promotions and discounts will reduce, lifting operating profitability to 3.2-3.4 per cent after it fell 30-35 basis points last fiscal and second, elevated inventory levels from last fiscal will moderate. That, and no major capex expected for showroom expansion, will reduce debt levels, it said. Live Events Consequently, Crisil Ratings said, the credit profiles of dealers will remain stable after moderating last fiscal from the healthy levels seen after the pandemic. Crisil Ratings said its analysis covers around 110 passenger vehicle dealers in the country. Volume growth is pegged at 4-6 per cent this fiscal, with realisations expected to rise 3-4 per cent backed by price increases by original equipment manufacturers (OEMs) and a continuing tilt towards sports utility vehicles (SUVs). Consequently, dealers are expected to see high single-digit revenue growth with both the urban segment (constituting two-thirds of the annual demand) and the rural segment growing in tandem, it said. Higher volumes will also lift ancillary revenues from sales of motor insurance and accessories, Crisil Ratings said, adding services and spares revenues will benefit from the high passenger vehicle sales seen from fiscals 2022 to 2024. All these are relatively higher-margin segments and will cumulatively contribute 11-13 per cent of total revenues, compared with around 10 per cent or lower during the past few fiscals, it said. With improved revenue visibility and push towards high-margin businesses, discounts and promotions will be limited to the non-peak seasons instead of year-round seen last fiscal. This reduction in sales promotion costs should provide a 15-20 basis points uptick to operating profit margins to 3.2-3.4 per cent this fiscal, it stated. "With moderate reduction in inventory on-year and limited capital expenditure for new showrooms, debt levels for dealers are likely to decline marginally this fiscal over last," said Ankita Gupta, Associate Director, Crisil Ratings.
India Gazette
15-05-2025
- Automotive
- India Gazette
India's PV dealers to clock 7-9% revenue growth against sales growth of 4-6%: Crisil Ratings
New Delhi [India], May 15 (ANI): India's passenger vehicle (PV) dealerships are set to clock high single-digit revenue growth in fiscal 2025, buoyed by a 4-6 per cent increase in sales volume and a 3-4 per cent rise in average realisations, according to a report by market intelligence firm Crisil Ratings. The report adds that the domestic passenger vehicle (PV) dealership industry will see revenue growth increase by 100 basis points (bps) on year, supported by a modest revival in sales volume even as realisations remain rangebound. As per the report, the volume growth figures are backed by price increase by original equipment manufacturers (OEMs) and continuing tilt towards sports utility vehicles (SUVs). Consequently, dealers are expected to see high single-digit revenue growth with both the urban segment (constituting two-thirds of the annual demand) and the rural segment growing in tandem. While a tad better than last fiscal, growth has eased from the strong post-Covid-19 rebound seen up to fiscal 2024 as volume growth normalized, the rating agency observed. According to the report, more volume will help dealers in two ways. First, auxiliary income will increase while promotions and discounts will decrease, raising operating profitability to 3.2-3.4 percent from 30-35 basis points previous fiscal year. Second, the excess inventory from the previous fiscal year will be reduced. This, combined with no large capital expenditures planned for showroom expansion, will cut debt levels, the report added. Consequently, the credit profiles of dealers will remain stable after moderating last fiscal from the healthy levels seen afterthe pandemic. Observing the trends, Himank Sharma, Director, Crisil Ratings, said 'Increasing urban disposable incomes backed by revision in tax slabs, interest rate cuts and a benign inflation, and sustained popularity of SUVs, will fuel urban demand for PVs.' 'In the rural segment, sales of small cars could see an uptick on expectations of a normal monsoon and improved farm incomes amid higher minimum support prices. Consequently, we see the industry growing at 7-9 per cent this fiscal,' the report added. The report further adds that higher volumes will also lift ancillary revenues from sales of motor insurance and accessories. Also, services and spares revenues will benefit from the high PV sales seen from fiscals 2022 to 2024. All these are relatively higher-margin segments and will cumulatively contribute 11-13 per cent of total revenues, compared with 10 per cent or lower during the past few fiscals. Furthermore, the rating agency added that with improved revenue visibility and push towards high-margin businesses, discounts and promotions will be limited to the non-peak seasons instead of year-round seen last fiscal. This reduction in sales promotion costs should provide a 15-20 bps uptick to operating profit margins to 3.2-3.4 per cent this fiscal. As per the observations of the report, dealers have witnessed their inventory rise to 50-55 days last fiscal from the normal 30-35 days as retail sales slowed and OEMs sent stock aggressively to push sales numbers. While increased demand will result in a 5-10 day inventory adjustment this fiscal year, it will stay higher than typical levels prior to fiscal 2024, the rating agency added. (ANI)
