India's Logistics Market Optimistic For FY26 As Rail Operators' Revenue To Soar With Double-Digit Growth, Ports And Warehousing See Gains

The logistics sector in India is set for robust growth, with rail operators expected to witness double-digit revenue growth and the warehousing sector projected to achieve a 3-5 per cent year-on-year increase in organic rentals this fiscal, according to a report by India Ratings (Ind-Ra).

For sea transport, Ind-Ra forecasts that port volumes will benefit from coastal goods movement and global container freight normalisation, driven by easing geopolitical tensions, including the Red Sea crisis and US-bound traffic normalisation.

However, EBITDA for container freight stations is expected to remain range-bound due to increased competition at major ports and a higher share of direct port deliveries.

Ind-Ra’s outlook for the logistics industry for FY26 is optimistic, bolstered by the government's multipronged investments across ports, rail, road, and air transport under initiatives like the National Logistics Policy and PM Gati Shakti National Master Plan. 

Pratik Mundhada, Associate Director, Corporates, Ind-Ra stated that sustained investments and increased operational scale are expected to enhance cost efficiency and profitability for Ind-Ra-rated integrated logistics companies.

He further added, “In Ind-Ra's base case, we see double-digit revenue growth for rail operators in FY26, supported by huge private investments in rakes and dry terminals in 2024. For warehousing entities, we project organic rental growth of 3-5 per cent year-on-year while demand for Grade-A spaces is expected to remain intact in FY26. Lastly, for freight forwarders, revenue growth and EBITDA are likely to be impacted by a moderation in global freight rates.”

Notably, India's Logistics Performance Index ranking improved to 38 in 2023, with aspirations to enter the top 25 by 2030 under Maritime Vision 2030.

The commissioning of the Western Dedicated Freight Corridor is expected to enhance rake and terminal utilisation, boosting container train operators' profitability. 

However, increased competition and potential revisions to haulage charges remain key concerns. 

The Eastern Dedicated Freight Corridor is projected to improve supply chain efficiency for thermal plants through faster and scheduled train operations.

"While we see capital investments by logistics infrastructure companies including warehousing, rail and dry terminals, their ability to raise long-term debt at a competitive pricing and Ind-Ra's expectation that these companies will be able to optimise the asset utilisation are supporting their credit profile and thereby the Stable rating Outlook," Ind-Ra concluded.