Outlook to remain stable for Indian road logistics: ICRA

ICRA, a rating agency, expects that the road logistics sector will do well in the year 2024, aided by stable domestic consumption and investment demand. It stated that the industry’s revenue growth is pegged at 6-9% in FY2024 on an elevated base of FY2023, driven primarily by demand from varied segments like e-commerce, FMCG, retail, chemicals, pharmaceuticals, and industrial goods, coupled with the industry’s paradigm shift towards organised logistics players, post-GST and e-way bill implementation. ICRA expects the outlook for the sector to remain stable.

Downside risks to the estimates remain from any material tapering of demand due to elevated inflation and interest rates and global supply-demand shifts impacting the Indian economic scenario. According to ICRA, the industry debt coverage metrics are expected to ease marginally in FY2024, compared to the FY2023 levels with a likely contraction in operating margins because of inflationary input cost pressures, primarily elevated crude oil prices and debt-funded capital expenditure for vehicle replacement, required prior to the introduction of the Scrappage Policy along with a high interest rate regime.