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Rating agency Icra has revised its growth estimates for the Indian road logistics sector to 11-13 per cent for the current fiscal (FY23) against the previous estimate of 7-9 per cent. It 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.

Further, Icra said it expects revenue growth of the Indian road logistics sector at a higher single digit for FY24 over FY23 on an elevated base and continuation of a healthy demand scenario. It added 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.

Besides, it 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, it mentioned timely and effective implementation of the National Logistics Policy and other such initiatives would be key to providing the requisite impetus to the sector.