Road Transport Fleet Operators to See Double-Digit Revenue Growth
The revenue growth of road transport fleet operators is expected to double to 9-11% this fiscal year, according to CRISIL Ratings. This growth is attributed to better domestic demand despite tepid exports.
Improved Operating Margins and Credit Profiles
Operating margins are also expected to improve by 75-100 basis points due to better fleet utilization and stable fuel costs. The credit profile of operators is also expected to remain strong as they moderate capital expenditure on fleet expansion. This follows strong additions in the past three fiscal years and the upcoming implementation of new guidelines for air-conditioned driver cabins.
Fleet Expansion to Moderate
Fleet operators significantly expanded their fleet size by 60% in the three fiscal years through 2024. This was driven by the sharp recovery in demand post-pandemic and the immediate returns from fleet additions. However, with a focus on consolidating operations, fleet additions are expected to moderate to 15% of the existing fleet size this fiscal year.
Impact of Air-Conditioned Cabin Mandate
The Ministry of Road Transport and Highways mandate for air-conditioned cabins for drivers from October 2025 will likely lead to nominal capex if operators choose to retrofit older vehicles.