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India's logistics sector likely to grow by 9-10% annually: Icra

It said while there have been fluctuations in the economy and freight demand due to GST implementation, the impact of the same would be temporary and would be corrected over the near term

Press Trust of India  |  New Delhi 

India's logistics sector likely to grow by 9-10% annually: Icra

Terming the outlook for logistics companies as positive in the medium term, rating agency on Monday said India's is likely to grow by about 10 per cent annually.

"With a gradual improvement in most of over the past couple of months, the outlook for the logistics companies is positive in the medium term. ... The Indian is expected to grow by 9-10 per cent per annum over the medium term," Icra said in a statement.


It said while there have been fluctuations in the and freight demand due to implementation, the impact of the same would be temporary and would be corrected over the near term.

Shamsher Dewan, Vice President and Sector Head, Corporate Ratings, said, "Our analysis of the Q1 FY2018 performance of key listed logistics companies indicate that their at 6.2 per cent (on Y-o-Y basis) outpaced the real growth, much of it was supported by increase in freight rates since the latter half of FY 2017 while volume growth remained flat for most of the companies."

In addition, companies have benefited from the underlying sectors such as automobile, etc. which have bucked the economic slowdown trend, it said.

From a profitability perspective, while the aggregate operating profit margins improved marginally on a sequential basis to 9.7 per cent during Q1 FY 2018, there was pressure on the margins on a Y-o-Y basis, it said.

Although the manufacturing activity has declined further in July 2017 post implementation, there has been a gradual improvement in most of over the past couple of months, which suggest the outlook for logistics companies is likely to turn favourable going forward, it said.

The road freight rates also followed a similar trend, with the decline in industrial activity and lack of freight demand resulting in a sharp decline of freight rates in July 2017, and subsequent recovery in August 2017 as the industrial activity and freight demand improved, it added.

"The would continue to benefit from economic recovery and revival in industrial output, while supply side factors like improvement in logistics infrastructure and emergence of logistics startups would offer further impetus to growth," it said.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Mon, November 06 2017. 16:22 IST
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