ICRA forecasts steady growth for road logistics in FY24

ICRA, the rating agency, has expressed optimism regarding the road logistics sector in FY2024, attributing it to steady domestic consumption and investment demand. They anticipate a robust demand scenario, foreseeing a 6-9% revenue growth compared to the elevated base of FY 2023. This growth is primarily fuelled by diverse sectors such as e-commerce, FMCG, retail, chemicals, pharmaceuticals, and industrial goods.

ICRA maintains a stable outlook for the sector, though potential risks exist due to high inflation and interest rates, as well as global supply-demand fluctuations affecting the Indian economy.

In FY2024, industry debt coverage metrics are expected to slightly improve from FY2023, despite a probable decline in operating margins. This decline can be attributed to rising input costs caused by inflation, particularly elevated crude oil prices, and debt-funded capital expenditure for vehicle replacement. Despite a decrease in crude oil prices during Q1 FY2024, logistics players experienced margin impacts due to delayed price adjustments.