Icra maintains ‘stable’ outlook for Indian road logistics sector

The optimism stems from the favourable scenario wherein most players reported strong growth in freight volumes on a sequential basis in the second quarter of FY’22

Topics


ICRA | logistics

Domestic rating agency Icra on Tuesday said the Indian road logistic sector is likely to witness healthy growth in FY2022 on the back of demand recovery and improved business activities.

The optimism stems from the favourable scenario wherein most players reported strong growth in freight volumes on a sequential basis in the second quarter of FY’22, and the momentum is likely to continue in the third quarter of the ongoing fiscal.

Domestic rating agency maintained a ‘stable’ outlook for the Indian road logistic sector.

After a subdued Q1 FY’22 on account of second wave of COVID-19, demand recovery and improved business activities from Q2 FY’22 onwards, led to better asset utilisation, which, along with cost-rationalisation measures, supported the operating margins in the current fiscal, Icra in a statement.

Growth over the medium-term would continue to be driven by demand from varied segments like e-commerce, FMCG, retail, chemicals, pharmaceuticals and industrial goods coupled with industry paradigm shift towards organised logistics players, post the GST and E-way bill implementation.

The sector is also expected to witness some consolidation on account of pandemic-related stress.

However, the threat of a new variant, has the potential to derail the momentum of recovery, if it becomes a source of fresh round of lockdowns/restrictions in the near-term.

“With an accelerated pace of vaccine roll-outs, pent up demand and firm freight rates, driven by high fuel prices, the sector is likely to grow at 13 per cent-16 per cent in FY2022 over FY2021.

“Nevertheless, the propagation of the new Omicron variant is a key monitorable, given the sector’s vulnerability to economic activity on an aggregate basis. We expect industry volumes to remain stable in FY2023 as well, with expectation of steady business activities and formalisation of the sector,” Suprio Banerjee, Vice President & Sector-Head, Icra Ratings said.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.


We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor