Some of the industry players also reported historically highest quarterly revenues during the quarter, it said in a note on Monday.
“It had witnessed a sharp decline in revenues and earnings over Q1 FY2021 due to demand-supply disruptions amidst the imposition of the nationwide lockdown. Piecemeal relaxations in lockdown related restrictions and adjustment to the new normal, revived economic activity and improved freight availability helped the players,” it said.
Most logistics players reported sustained growth in freight volumes on a year-on-year basis over Q3 FY2021 and Q4 FY2021. The rail freight traffic reported similar trends, reporting Y-o-Y growth of 13 per cent and 11 per cent in Q4 FY2021 and Q3 FY2021 respectively.
The railways even reported its highest ever monthly freight volumes in March 2021, surpassing previous highs of January 2021.
The seaways freight traffic, though growing slower than the other modes on account of supply-side/infrastructure constraints, has nevertheless, also reverted to its growth trajectory from November 2020 onwards with the highest ever monthly freight volumes reported in March 2021.
“Overall, the aggregate revenues of ICRA’s sample of logistics companies grew on a Y-o-Y basis by 42 per cent in Q4 FY2021 compared to previous fiscal and 9 per cent sequentially,” said ICRA in the report.
In terms of profitability, logistics companies have also been able to arrest the margins contraction to a significant extent, despite higher fuel prices, supported by aggressive rationalisation of fixed overheads and cost-control initiatives.
However, as the impact of several cost-control initiatives like salary reduction, rental waivers etc. which were temporary in nature, negate in near term the margin levels for FY2022 is likely to moderate going forward, said ICRA
The problem is compounded by the continued firming up of diesel prices. Accordingly, ICRA expects the aggregate operating profit margins of its sample to be in the range of 9-9.5 per cent in FY2022, against 9.9 per cent in FY2021. The logistic companies’ ability to hike freight rates will be a key determinant to sustain profitability in the near term.
