Stable outlook for Indian retail sector in 2012: Fitch

18 Jan 2012

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The Indian retail sector faces a posictive outlook in 2010, says ratings agency Fitch.

"There are likely to be economic headwinds, which would impact Indian retailers. However, sales growth driven by space additions and inflation, stable margins, efficient working-capital management and flexibility to defer / tone down expansion plans are expected to result in a stable credit profile for Fitch-rated retail companies," Fitch said in a statement.

It added, the agency expects food and value segments "to provide a defensive play in the downturn".

Fitch has lowered its real India GDP growth projections to 7.0 per cent from 8.5 per cent for financial year to end March 2012 (FY12) and to 7.5 per cent from 8.0 per cent for FY13.

Consumer discretionary income is likely to be lower due to higher inflation and interest rates.

However, the agency notes that inflation provides a direct fillip to same-store-sales-growth.

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