Ratings agency ICRA has said that the near-term growth of the Covid-19-battered logistics sector is expected to be driven by specific segments like e-commerce. Citing how trends in online purchases and deliveries have picked up substantially post the lockdown, it also pointed out the pickup in the automotive sector, especially entry-level cars, motorcycles, and the tractors segment which augurs well for specific logistics players like auto carriers. However, other segments like capital goods continued to remain subdued for the logistics sector.
In its analysis of ten leading logistics companies, ICRA observed an adverse impact in Q1FY21 as aggregate revenues of players declined by 35 per cent on a YoY basis, in line with the sharp moderation in GDP growth. The agency said while the revenues and profitability in Q2 FY2021 would have revived from the troughs witnessed in Q1 FY2021, given ongoing intermittent lockdowns in various parts of the country and continued rapid spread of the pandemic constraining the pace of recovery in industrial activity, the logistic sector is also likely to witness a gradual roadmap to recovery.
For FY21, it expects the revenue of its sample to decline by 18-20 per cent YoY, against the backdrop of 11 per cent contraction in GDP. Besides, it said over the medium term, the sector is likely to witness some consolidation trends, given the rising pressure on viability of small fleet operators.