For road transport operators, revenue growth is expected to double to 9-11% this year, ET Infra

NEW DELHI: A report by Crisil Ratings shows that revenue growth for road transport fleet operators is expected to double to 9-11 per cent in the current financial year 2024-25.

The rating agency’s estimates are based on improved domestic demand despite weakening exports. Operating margin improves due to better fleet utilization and fixed fuel costs.

Operators’ credit profiles are also expected to remain strong as they can expect to see reduced capital spending towards expansion after significant increases over the past three years, even as new guidelines for air-conditioned driver’s cabins come into effect next year.

Reports indicate that car manufacturers will soon be required to install air conditioners in truck drivers’ cabs, with the rollout expected to begin in 2025.

“With the current focus on consolidating operations, fleet additions this fiscal year would reduce to 15 percent of existing fleet size, based on a significantly expanded base. For starters, the October 2025 regulation on air-conditioned driver cabins by the Ministry of Road Transport and Highways would lead to nominal capital expenditure if operators opted to retrofit older vehicles,” the Crisil report said.

He further noted that almost one-third of commodity demand comes from export-oriented sectors, which are showing signs of improvement after slowing last year, in line with growth trends in India’s key export destinations – the euro zone and the US.

Crisil expects volume growth this year to be driven by domestic freight-intensive sectors such as mining, industrials, manufacturing, infrastructure and engineering goods.

As some costs remain constant, operators’ operating margins are expected to increase to 9.0-9.5 percent this year, he added. (OR)