Lost your password?
Don't have an account? Sign Up

Strong GDP growth in FY22 to drive logistics demand: Ind-Ra

Share This News Story:

Mumbai:  Strong GDP Growth in Financial year 2022 will drive logistics demand India Ratings and Research said.

According to the agency, strong-to-moderate recovery is already being witnessed across various logistics sub-sectors.

Besides, commissioning of the Dedicated Freight Corridor could boost volumes and efficiencies across ports as well as Inland Container Depot and Container Freight Station players.

As per Ind-Ra report, major ports’ year-on-year volume growth has been positive for the past three months, while private ports have also reported resilient volumes in 9MFY21.

“In FY22, Ind-Ra estimates an 8 per cent YoY improvement in volumes for India ports sector (major + private ports), post an estimated 4 per cent yoy decline in FY21.”

“The 8 per cent YoY rise will be led by private ports, which in the past five years have displayed a median multiplier (vs real GDP growth rate) of ‘1.4x’, thus outperforming growth from major ports. Historically, India’s ports volumes have closely followed GDP growth, with container growth coming in ‘2x’ of overall cargo volumes.”

Besides, the report cited that domestic air travel demand, which has continued to recover in 2HFY21, is expected to strengthen in FY22, though the risk to this view arises from fresh waves of Covid-19 recently.

“Both corporate and domestic travel demand are already showing signs of revival, which has helped support load factors and yields, while cargo volumes are expected to rise amid stronger macroeconomic fundamentals and e-commerce push.”

“Ind-Ra forecasts domestic passenger numbers to rise 10 per cent in FY22 (over FY20) implying a GDP multiplier of ‘0.9x’, lower than the ‘2.4x’ (median estimate) for the FY15-FY20 period.”

In terms of inland container depots, the agency forecasted a healthy pickup in volumes even though competition remains intense and realisations remain soft.

“The reduced dwell time after the commissioning of ‘Dedicated Freight Corridor’ and increased double stacking volume will support higher operating efficiencies, which is likely to support EBITDA margins in FY22-FY23.”

“For warehouses, Goods and Services Tax-led consolidation and rationalisation of occupancy rates could continue in FY22.”

Source : ET

Share This News Story: