India’s retail sector is expected to report steady revenue growth in the September quarter, supported by value retail, footwear and innerwear, even as subdued apparel demand and a shift in festive spending weigh on some segments. Metro Brands, Campus Activewear and Vishal Mega Mart are among the preferred retail stock picks of Elara Securities ahead of the Q2FY27 earnings season.
Elara Securities has assigned a Buy rating to Vishal Mega Mart, Page Industries, Vedant Fashions, Safari Industries, Dollar Industries, Metro Brands and Campus Activewear. The brokerage has an Accumulate rating on VIP Industries, Bata India and Relaxo Footwears, while Go Fashion has been rated Reduce.
In its retail sector preview, Elara Securities expects its retail coverage universe to deliver revenue growth of around 11.8% year-on-year (YoY) and EBITDA growth of approximately 12.7% in Q2FY27. Aggregate EBITDA margins are projected to improve by about 13 basis points to 15.5%, as operating leverage offsets inflation in cotton and crude-linked input costs.
Premium categories are expected to continue outperforming, while demand in the mid-market segment is likely to remain selective and promotion-led. Organised retailers could also gain market share from smaller players, which continue to face pressure from elevated input costs, the brokerage said.
Festival demand shift to weigh on apparel retailers
Festive demand fell in the base quarter last year, when Navratri began on 22 September 2025. This year, the festival shifts to Q3FY27, while the Shraddh period is expected to delay some purchases until late September, according to Elara Securities.
The brokerage expects apparel revenue across its coverage universe to decline by around 3.8% YoY in Q2FY27, with EBITDA falling approximately 5%, as subdued demand, input cost inflation and operating deleverage weigh on performance.
Vishal Mega Mart is expected to outperform, with revenue projected to grow 17.5% YoY and same-store sales growth (SSSG) estimated at around 6%, supported by store additions.
In contrast, Vedant Fashions and Go Fashion are expected to report modest SSSG of approximately 1% and 0.6%, respectively. Delayed festive demand, weak off-season wedding demand and ongoing store rationalisation are likely to constrain their performance.
Footwear: Premiumisation to support growth
Footwear demand remains healthy, driven by premiumisation, calibrated price increases and expansion across retail and digital channels, Elara Securities said.
The brokerage expects its footwear coverage universe to post revenue growth of around 8.8% YoY and EBITDA growth of 10% in Q2FY27.
Metro Brands is expected to lead the segment, with projected revenue growth of 13.2% YoY, supported by higher volumes and a favourable product mix.
Relaxo Footwear’s recovery is expected to be driven by improved realisations, although margins may remain under pressure. Bata India, meanwhile, is likely to report modest revenue growth but a stronger profit after tax (PAT) recovery, aided by lower markdowns and cost-control measures.
Innerwear: Demand recovery to continue
The innerwear segment is expected to record revenue growth of approximately 11% YoY in Q2FY27, supported by volume momentum at Page Industries, the spillover of three days of undelivered billing from Q1, and the impact of May’s price increase.
New product initiatives, including the Disney-Marvel launch and expansion in athleisure, are also expected to support demand.
However, profitability may remain under pressure at Page Industries and Dollar Industries as higher-cost cotton inventory flows through the cost of goods sold. Recent price increases are expected to partly offset input cost inflation, while Dollar Industries could face additional pressure from volume weakness following price hikes and elevated employee costs.
Luggage: Recovery continues, but margins remain under pressure
The organised luggage segment is expected to sustain its recovery, supported by new product launches, price increases and a weak base at VIP Industries.
Elara Securities projects revenue growth of around 10.9% YoY for the segment. Safari Industries is expected to report growth of approximately 11%, aided by e-commerce traction.
VIP Industries’ EBITDA loss is likely to narrow materially, although its EBITDA margin is expected to remain negative at around 9%.
Elevated discounting, higher resin costs linked to crude oil prices and increased marketing expenditure could weigh on profitability. Safari Industries’ EBITDA margin is expected to contract by around 193 basis points, according to the brokerage.
What investors should watch
The key factors for retail investors in Q2FY27 will be the timing of festive purchases, demand trends across price segments, store expansion and the extent to which retailers can pass on higher input costs.
While value retail, footwear, and innerwear are expected to support sector growth, apparel retailers could face near-term pressure due to the shift in festive demand into Q3FY27. Elara Securities’ preference for Metro Brands, Campus Activewear and Vishal Mega Mart reflects its focus on companies with stronger growth prospects.
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
