Business News/ Industry / Infrastructure/  Indian road logistics industry to see high single-digit revenue growth in FY24: Report

The Indian road logistics sector is expected to witness high single-digit revenue growth in FY2024, according to ratings agency Icra. The growth will be driven by stable domestic consumption, investment demand, and an increased shift towards organized logistics players. 

However, risks remain from factors such as high inflation, interest rates, potential Covid waves, and the impact of a sub-par monsoon on the economy.

Icra predicts that cash flows and debt coverage metrics will stay comfortable in spite of debt-funded capital expenditure required for vehicle replacement before the implementation of the scrappage policy. The sector enjoyed support in FY2023 from the accelerated pace of business activities, improved demand from end-user segments, and favorable realization, despite challenges such as inflation, higher fuel prices, and driver shortages.

Suprio Banerjee, vice president & sector head of corporate ratings at Icra, expects operating profit margins to moderate to 12-14% in FY2024. He emphasizes the importance of monitoring operators' ability to raise rates to offset input price increases amid stiff competition. Revenue growth is anticipated to be driven by demand from sectors like e-commerce, FMCG, retail, chemicals, pharmaceuticals, and industrial goods, as well as the industry's shift towards organized logistics players following the implementation of GST and e-way bills.

The report also highlights the growth potential of multimodal offerings and the importance of timely implementation of initiatives like the National Logistics Policy in conjunction with the PM Gatishakti National Master Plan for providing impetus to the sector.

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Updated: 17 Apr 2023, 02:58 PM IST
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