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Domestic rating agency Icra has said the Indian road logistic sector may witness healthy growth in current financial year (FY22) due to demand recovery and improved business activities. It maintained a 'stable' outlook for the Indian road logistic sector. The optimism stems from the favourable scenario wherein most players reported strong growth in freight volumes on a sequential basis in the second quarter of FY'22, and the momentum is likely to continue in the third quarter of the ongoing fiscal.

It mentioned after a subdued Q1 FY22 on account of second wave of COVID-19, demand recovery and improved business activities from Q2 FY22 onwards, led to better asset utilisation, which, along with cost-rationalisation measures, supported the operating margins in the current fiscal. Growth over the medium-term would continue to be driven by demand from varied segments like e-commerce, FMCG, retail, chemicals, pharmaceuticals and industrial goods coupled with industry paradigm shift towards organised logistics players, post the GST and E-way bill implementation. The sector is also expected to witness some consolidation on account of pandemic-related stress.

Icra Ratings, Vice President & Sector-Head, Suprio Banerjee said ‘the propagation of the new Omicron variant is a key monitorable, given the sector's vulnerability to economic activity on an aggregate basis. We expect industry volumes to remain stable in FY2023 as well, with expectation of steady business activities and formalisation of the sector.’