It said the industry’s revenue growth is pegged at 6-9 per cent in FY2024 on an elevated base of FY2023, driven primarily by demand from varied segments like e-commerce
New Delhi: Rating agency ICRA on Wednesday said that it anticipates a favourable demand scenario for the road logistics sector in FY2024, aided by stable domestic consumption and investment demand.
It said the industry’s revenue growth is pegged at 6-9 per cent 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.
“ICRA expects the outlook for the sector to remain stable,” it said.
According to ICRA, 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.
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, it added.
The rating agency noted that despite the decline in crude oil prices in Q1 FY2024, the operating margins of the logistics players were impacted due to the lag in price hikes.
