India Ratings gives logistics stable outlook in FY22, sees demand growing

Mentioning the commissioning of a dedicated freight corridor, India Ratings and Research (Ind-Ra), reports that India’s logistics sector looks stable in financial year 2021-22 as a recovering economy builds demand. Adani Ports and Special Economic Zone was among ports that reported resilient volumes in FY21. Ind-Ra estimates an 8 per cent year-on-year improvement in volumes for Indian ports in FY22, compared to an estimated 4 per cent year-on-year decline in FY21. The 8 per cent year-on-year rise will be led by private ports, which in five years have displayed a median multiplier (vs real GDP growth rate) of 1.4x, thus outperforming growth from major ports.
India’s ports volumes closely follow the country’s GDP growth, with container growth coming in 2x of overall cargo volumes.
For inland container depot/container freight station operators, Ind-Ra forecasts a healthy pickup in volumes 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.