ICRA revises road logistics sector growth forecast to 11-13% this fiscal

Rating agency ICRA on Tuesday revised its growth estimates for the Indian road logistics sector to 11-13 per cent for the current fiscal against the previous estimate of 7-9 per cent.

The rating agency said the growth is supported by a strong demand environment, coupled with the continuation of firm freight rates, also supported by the base effect to an extent, given that FY22 had a weak first quarter due to the second wave of COVID-19.

ICRA further said it expects revenue growth of the Indian road logistics sector at a higher single digit for F24 over FY23 on an elevated base and continuation of a healthy demand scenario.

The debt coverage metrics of the logistic sector are expected to marginally moderate in FY23 and FY24 compared to the FY22 levels, owing to expected debt-funded capital expenditure for vehicle replacement required prior to the introduction of the scrappage policy, along with the rising interest rate regime, it added.

Further, Icra said multimodal offerings are likely to gain from increased acceptance and traction going forward, as players offering multi-modal services have more flexibility.

In addition to these, timely and effective implementation of the National Logistics Policy and other such initiatives would be key to providing the requisite impetus to the sector, the agency said.