New Delhi: ICRA expects the revenues of the Indian highway logistics business to stay range-bound and develop at sedate tempo of three%-6% in FY2025, given the restricted capacity of gamers to extend the freight charges, anticipated softening in Authorities capex through the elections (given the Mannequin Code of Conduct necessities) and moderation in shopper demand sentiments amid excessive inflation and rates of interest.
The outlook for the sector continues to be steady, fuelled by a sustained momentum in financial actions, enhanced traction of organised commerce and continued help from assorted segments like e-commerce, FMCG, retail, prescription drugs, and industrial items.
Suprio Banerjee, Vice President and Sector Head – Company Rankings, ICRA Restricted, stated, “ICRA’s pattern set[1] witnessed a modest income development of two.3% in 9M FY2024 on a YoY foundation amidst tapering demand resulting from excessive inflation, an uneven monsoon, a excessive rate of interest regime and comparatively muted festive season. Thus, on an elevated base of FY2023, ICRA estimates a low single digit development of 2-5% in FY2024. The expansion for highway logistics sector in FY2025 is anticipated to be within the vary of 3-6% , owing to the impression on demand from excessive inflation, excessive rate of interest regime and comfortable (although bettering) shopper sentiment. The business working revenue margin contracted to 11.2% in 9M FY2024 (down ~150 bps YoY), on account of improve in working prices (ex-fuel) because of the excessive inflationary regime, and stress on realisations, given the sticky retail diesel charges, limiting any formula-driven value rise. ICRA expects the margins to stay within the vary of 10.5-12.5% in FY2024 and FY2025 over 12.4% in FY2023 amidst inflationary headwinds and regardless of advantages of effectivity beneficial properties resulting from growing digitalisation and value-added service choices of business gamers.
Key debt metrics like Complete debt / OPBITDA is anticipated to have moderated marginally to 1.5x-1.7x in FY2024 from 1.4x in FY2023 with rising working prices (ex-fuel), given the persistently excessive inflation ranges and improve in debt resulting from debt-funded capital expenditure for brand spanking new autos, and anticipated rise in lease liabilities resulting from increasing department community and expertise investments.
E-way month-to-month volumes remained largely steady within the final 4 months at above 85 million, publish reporting all-time excessive volumes of 100 million in October 2023, signifying resilient home commerce and transportation actions. The month-to-month FASTag volumes have additionally moved in tandem with the e-way payments, starting from 295 to 350 million within the present fiscal, with an all-time peak of 348 million in December 2023, reflecting enterprise continuity.
“Moreover, highway logistics gamers additionally stay uncovered to environmental and social dangers. Tightening emission management norms necessitate different gas car investments or investments within the present fleet. They’re additionally uncovered to litigation / penalties arising from points associated to dangerous emissions and waste, which can result in monetary implications and impression popularity. The social threat consists of driver scarcity, well being, security, and high quality of work-life steadiness for drivers,” Banerjee added.
