Revenue growth of organised luggage makers to halve to 8-10%

Operating profitability to dip 30-50 bps; controlled debt to aid credit profiles  

India’s organised luggage industry will see revenue growth reduce to 8-10% this fiscal from ~18% last fiscal, primarily

due to a high base, as industry size almost doubled between fiscals 2022 and 2024.  

Demand remains stable, backed by continued penetration of hard luggage, steady tourism and corporate travel.

However, realisations have reduced due to two factors. First, increasing competition among manufacturers with the

entry of new players and, second, increased inventory levels due to moderation in volume growth, which has led to 

aggressive pricing and impacted average selling prices, mainly in the economy segment.  

With falling realisations, operating margin dipped 150 basis points (bps) in fiscal 2024 and will drop a further 30-50

bps between 13.5-14.0% this fiscal. The impact would have been higher but for increased contribution from own

manufactured hard luggage segment, as against imports, and stable raw material prices. 

Nonetheless, inventory rationalisation during this fiscal will limit any further downside on average selling prices and

reliance on external debt, which will support credit profiles over the medium term. 

A CRISIL Ratings analysis of the luggage makers it rates, accounting for ~85% of the organised sector’s Rs 7,800

crore revenue, indicates as much. 

The Indian luggage industry is dominated by a few large organised players, which have increased domestic capacity

and backward integrated over the last three fiscals, while the unorganised sector remains largely dependent on China

for its requirements.  

A strategic shift of luggage makers to own hard luggage manufacturing segment is reflected in imports growing slower 

(than industry) at ~5% in the past five years.  

Says Himank Sharma, Director, CRISIL Ratings, “Rising preference for hard luggage and better quality at

competitive prices has benefited organised players, with their share in Indian luggage industry increasing to

~45% this fiscal. However, risks are rising, too, as tapering of growth after three years of double-digit runup

and rising competition from new entrants will lead to higher promotional expenses and, thereby, moderation

in margins.” 

That said, some support is expected from stable prices of raw materials – polypropylene, polycarbonate, and 

polyamide, which comprise 40-45% of the cost for luggage makers – even as continued consumer preference towards

hard luggage aids operating efficiency. 

The inventory level, which rose to 114 days in fiscal 2024 on account of moderation in demand, is on the mend and is

expected to moderate to 100-105 days for this full fiscal.  

Debtors remain stable, indicating the control of organised players over their sales channels even as they expand retail

networks to Tier 2 and 3 cities. This will lead to lower reliance on short-term borrowings by the luggage makers.

Given continued balance sheet strength, steady demand and almost-full capacity utilisation, the players are expected

to further increase the manufacturing capacity for hard luggage.