Domestic commercial fleet operators likely to clock 8-10% revenue growth in FY26: Crisil Ratings

Crisil Ratings in its latest report has said that domestic commercial fleet operators are likely to clock 8-10% revenue growth this fiscal (FY26), building on a robust compound annual growth rate (CAGR) of 12-13% over the four years through fiscal 2025. Strong domestic and import-related fleet requirement will drive growth even as export-related demand growth remains modest.

According to the report, higher demand will increase fleet utilisation to 86-87% this fiscal from 85% last fiscal despite fleet additions. As a result, operating margins will remain stable, even as operational costs are set to increase due to the regulatory requirement of adding air conditioning (AC) to cabins of new fleet from October 2025. Further, the cost of acquisition of new fleet will reduce due to the recent reduction of Goods and Services Tax (GST) on commercial vehicles to 18% from 28%. Thus, credit profiles are expected to remain stable despite debt addition for fleet.

The rating agency further noted that even as revenues rise, fuel cost - accounting for 43-45% of the total cost - will also see a marginal increase as AC cabins become mandatory for new fleet. Trip related and other operational costs are expected to rise, too, though most of these costs will be passed through to customers, albeit with a lag. However, increased fleet utilisation will ensure operating margins remain stable at 8.0-8.5%.

Besides, the report said that higher revenues and stable margins will result in improving cash flows, partially funding the incremental working capital requirement. Dependence on external short-term debt will be limited, while the operators will undertake sizeable fleet additions funded by long-term debt, riding on continued strong demand.