“Fleet operators could see 10-12% revenue growth this fiscal year”

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FLEET operators could see revenue growth of 10-12% this fiscal year as they are expected to continue to grow their fleets due to increased demand from road freight sectors and higher refunds due to the cost of shipping. ‘high borrowing, among others,’ said credit rating agency Crisil. Wednesday.

The broad recovery of the economy from the ebb of the pandemic and demand from sectors such as steel, cement and coal propelled fleet utilization to 88% last fiscal year from 75% in the past year. of FY21, the rating agency said.

With high freight demand, fleet utilization will grow rapidly with increased capacity. As interest rates rose after the RBI raised the repo rate, the underlying demand will ensure fleet operators opt for fleet additions, Crisil said.

According to the rating agency, although fleet additions would increase debt and leverage, credit profiles will remain stable. An analysis of 45 large fleet operators assessed by Crisil Ratings, representing one-fifth of the industry by size, indicates growth of 10-12%.

Among these, major operators are expected to increase their fleet size by 12-15% year-on-year this fiscal year, which will be financed by a mixture of external debt and regularization, it said. he said, adding that while higher debt is reflected in increasing leverage and lowering debt protection metrics, they will remain adequate.

Crisil noted that fleet utilization is expected to improve to around 95% in the current fiscal year due to continued economic recovery and minimal disruption from the pandemic.

Continued demand from freight-intensive sectors and increased fleet utilization resulted in higher freight rates 3-4% YoY, while global crude oil deviation led to revisions to retail fuel prices in the domestic market, he added.

“Freight rates are being passed on with some delay to shippers as fleet operators try to balance rate increases with fleet utilization.

With fleet utilization up 7-8% and freight rates reflecting retail fuel prices, fleet operator revenues will grow 10-12% this fiscal year, while will remain stable at levels of 7.5-8%,” Rahul said. Guha, director at Crisil Ratings.