Indian ship recyclers' revenue seen rising 15% this fiscal: Crisil ratings

Crisil Ratings forecasts a 15% revenue growth for the Indian ship recycling industry in the current fiscal year, marking a recovery after two consecutive years of decline. This optimistic outlook is driven by the increased availability of aging vessels globally, which enhances the competitiveness of Indian recyclers relative to their counterparts in Bangladesh and Pakistan. The industry experienced declines of 22% in FY24 and 8.5% in FY23, according to Crisil.

The rating agency expects reduced input costs due to the influx of aging vessels, contributing to a projected 75 basis points improvement in operating profitability to reach 6.5% this fiscal year. Indian recyclers are poised to capitalize on a significant share of the growing volume of condemned vessels, with anticipated volume growth ranging between 20% and 23%. Meanwhile, challenges faced by competitors in Bangladesh and Pakistan, including foreign currency shortages, may divert vessel owners towards the more stable Indian market. This favourable scenario is expected to sustain stable credit profiles for Indian ship recyclers, supported by robust cash generation and minimal capital expenditure.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.