ICRA said in a report that the outlook for the sector continues to be stable, driven by sustained momentum in economic activities, increasing attractiveness of organized trade and continued support from various segments such as e-commerce, FMCG, retail, pharmaceuticals and industrial goods. liberate, release, free.
Growth of the Indian road logistics industry is expected to be modest at 3-6% in FY25, impacted by challenges such as curbs on freight rate increases, cuts in government spending. government-related elections and reduced consumer demand due to inflation and high interest rates. ICRA maintains a stable outlook, supported by consistent economic activities.
Suprio Banerjee, vice president and industry head – Corporate Ratings at ICRA Limited, sheds light on the financial performance and prospects of the logistics industry. Banerjee revealed that ICRA analysis shows a modest 2.3% increase in revenue in the first nine months of FY24, compared to the same period last year. This growth comes amid challenges such as high inflation, erratic rainy seasons, rising interest rates and a muted festive period.
“On an enhanced basis of FY23, ICRA estimates low single-digit growth of 2-5% in FY24,” he further predicted. Looking ahead to FY25, Banerjee predicts the growth rate of the road logistics sector will be at 3-6%, influenced by ongoing economic factors such as inflation and interest rates, as well as Consumer sentiment is gradually recovering.
Industry operating margins also fell, to 11.2% in the first nine months of fiscal 2024, down about 150 basis points from the previous year. This decline is attributed to increased operating costs, excluding fuel, and the challenge of price increases due to stable retail diesel prices.
Looking ahead, Banerjee expects, “Margins will remain in the range of 10.5-12.5% in FY24 and FY25,” despite inflationary headwinds. This forecast is also supported by the potential for efficiency gains from digitalization and new services offered by industry players. Regarding debt figures, he noted that the Total Debt/OPBITDA ratio increased slightly, due to higher operating costs and investments in new vehicles and technology.
Fiber2 Fashion News Desk (KD)
