The Indian Road logistics sector is expected to post a robust revenue growth of 10–12 per cent year-on-year in fiscal 2025 (FY2025), according to the latest outlook from ICRA. Although the sector experienced some disruption in first quarter due to the general elections, a combination of favourable monsoons, strong festive demand, and sustained government focus on capital formation supported business recovery and growth.
ICRA forecasts a moderated but steady revenue growth of 6–9 per cent in fiscal 2026 (FY2026). This anticipated growth is expected to be driven by stability in economic activities, an uptick in capital expenditure (capex), and increased consumer spending, bolstered by government-led tax and interest rate cuts.
ICRA projects aggregate operating profit margins to remain in the 10–12 per cent range over the two fiscal years—slightly down from ~12 per cent in fiscal 2023 but largely stable compared to ~11 per cent in fiscal 2024 (FY2024).
Despite this positive outlook, the sector remains sensitive to global demand trends and inflation levels, given its strong correlation with overall economic activity. Operators continue to face margin pressures due to high operating costs—particularly from sticky retail diesel prices—and a limited ability to raise freight rates amid intense competition. Their capacity to implement commensurate rate hikes remains a key monitorable, ICRA said in a report.
Debt coverage metrics saw marginal moderation in FY2024, primarily due to rising non-fuel operating expenses and increased borrowings to support capex in fleet expansion, warehousing, and technology upgrades. Lease liabilities have also risen as logistics firms expand their branch networks.
Nevertheless, the sector’s outlook remains stable. Continued demand from e-commerce, retail, chemicals, pharmaceuticals, and industrial goods, along with targeted government measures to boost consumer sentiment, is expected to sustain the sector’s momentum.
