Indian Road Logistics Sector Anticipates Growth Amid Festive Season Demand

The Indian road logistics industry is on the point of widespread growth, fueled by the imminent festive season and a rebound in patron demand. A recent record from ICRA forecasts a slight revenue increase of 6-9% 12 months-on-yr (YoY) for FY2025. This positive outlook follows a challenging beginning to the 12 months, disrupted by way of the General Elections within the first quarter. As the industry stabilizes, it stands to advantage from accelerated manufacturing output, restocking efforts, and a tremendous rise in purchaser spending, particularly within the e-commerce area.

The festive season is traditionally a peak call for the duration of logistics, and it is predicted to play a pivotal function in this growth trajectory. Favorable monsoon situations, coupled with ongoing authorities’ help for capital formation, are predicted to similarly enhance logistics calls across various sectors, consisting of e-commerce, fast-moving consumer goods (FMCG), retail, prescribed drugs, and commercial goods. ICRA continues a ‘Stable’ outlook for the sector, underpinned by using robust calls for fundamentals and supportive authorities guidelines.

Despite inflationary challenges, organized logistics businesses are projected to maintain their price premiums, which will contribute to their continued profitability in FY2025. Operating earnings, however, are probably going to be stable, with expected margins of 11–12%, which is a little less than the high levels seen in FY2023. Operating profit margins eased to 11.2% in FY2024, down 120 basis points from the previous year, as a consequence of pressure from rising operational costs, especially non-fuel expenses.

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ICRA also points out that even when businesses make investments in new cars, branch network expansions, and technological upgrades, debt coverage ratios stay strong. In FY2025, interest coverage and the ratio of total debt to EBITDA are predicted to stabilize at a range of 7.0x to 8.0x and 1.4x to 1.7x, respectively. Notwithstanding probable rises in debt levels, this illustrates the industry’s strong overall financial health. Trade activity has demonstrated resilience, with monthly e-way bill volumes continuously surpassing 100 million and reaching a peak of 105 million in August 2024. FASTag transactions have also continued to be robust, ranging from 295 to 350 million in FY2024.

The street logistics industry nevertheless confronts social and environmental issues despite these encouraging trends. Tighter pollution control laws will force significant expenditures on fleet modernization or alternate fuel cars. Furthermore, problems like labor shortages and problems with stability in the workplace, health, and safety provide constant challenges that might impair operational effectiveness. It is anticipated that at some point in FY2025, as the sector prepares for the holiday season, power will grow inside the Indian street logistics zone due to a combination of regular consumer demand, increased production interest, and strategic investments in generation and infrastructure.

Source By:- https://www.logisticsinsider.in/