Rail operators likely to post double-digit growth in FY25: India Ratings
- IBEF
- January 20, 2025
Rail operators' revenue is anticipated to grow in double digits. At the same time, the warehousing sector is projected to see a 3-5% YoY increase in organic rentals this fiscal, according to India Ratings. Demand for Grade-A space is expected to remain steady. For sea transport, port volumes will likely benefit from coastal goods movement and easing global container freight, driven by reduced geopolitical tensions, including the Red Sea crisis and normalised US-bound traffic. However, container freight stations' EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) is expected to remain constrained due to higher direct port deliveries and intense competition at major ports.
India Ratings has assigned an improving outlook for the logistics sector for FY26, citing government investments in ports, rail, road, and air transport as key growth drivers. Sustained investments and scale expansions are expected to enhance cost efficiency and profitability for rated logistics firms. Double-digit revenue growth is projected for rail operators by FY26, supported by private investments in rakes and dry terminals in 2024. Organic rental growth of 3-5% is foreseen for warehousing, alongside stable demand for Grade-A spaces. Despite these positives, profitability for container freight stations is likely to remain subdued this fiscal. The sector's growth is further supported by initiatives like the National Logistics Policy, PM Gati Shakti National Master Plan, and increased private capital expenditure in logistics infrastructure. India's Logistics Performance Index rank improved to 38 in 2023, intending to enter the top 25 by 2030 under Maritime Vision 2030. Full commissioning of the Western Dedicated Freight Corridor is expected to boost container train operators’ profitability. However, competition and haulage charge revisions remain challenges. The overall rating outlook for logistics companies remains stable, driven by sustained operational performance and prudent leverage profiles.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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