From new infrastructural developments to new policies, a lot is being done to develop and boost road logistics in India. And, analysing the accelerated pace of business activities pivoting around the same, the Investment Information and Credit Rating Agency of India Limited, now known as ICRA, has predicted a growth of 11–13 percent in the sector, against the previous expectations of 7–9 per cent.
“Quarterly revenues for the logistics sector witnessed a 6.1per cent growth in Q2 FY2023 compared to Q1 FY2023, owing to healthy and sustained demand from the manufacturing sector,” said Suprio Banerjee, Vice President & Sector Head – Corporate Ratings. Revenue remains close to multi-year highs for quarterly revenues, owing to a sustained recovery in industrial activity. This is also reflected in the stability in monthly e-way bill volumes as well as FASTag volumes during Q2 FY2023, which also continued during the Oct-Nov 2022 period. On the other hand, elevated crude oil prices due to the Russia-Ukraine conflict witnessed from Q4 FY2022 also had an impact on the margins of the sector. While the larger players continue to manage rate hikes to a large extent in FY2022, their sustained ability to do the same remains to be seen. Most organised players were able to pass on the increase in fuel cost to their customers, as reflected in the healthy operating margins of 14.0 per cent in FY2022 and 12.5 per cent in H1 FY2023 against 12.1per cent in FY2021. H1 FY2023 witnessed a moderation in margins over 13.5 per cent in H1 FY2022 on account of increased vehicle hire prices and increased fuel procurement charges for some of the players.”