"The likely impairment of repayment behaviour of truck operators will get reflected in the collection efficiency of truck finance companies and their projections related to business growth and profitability will need to be reviewed," a Crisil release issued in Mumbai on Thursday said. "At least over the next 3-6 months, repayment behaviour of truck operators would get impacted due to the higher operating costs. Exercising control over potential delinquencies would therefore be a challenge for truck finance companies and would be a key rating sensitivity," Crisil added.

The report said that diesel price hike would adversely impact the operating surplus of truck operators. "Their ability to fully pass on the impact of increase in fuel cost is constrained by the demand-supply dynamics in the truck market," Crisil said.

"The truck operator's ability to honour his obligations is driven centrally by utilisation of assets and control over operating costs. Over the past couple of years, the slowdown in industrial activity had resulted in declining load factor besides a gradual build-up of overcapacity situation in the trucking market, which in turn has led to softening of interest rates," the rating agency said.

However, over the past six months, the freight rates have remained stable, supported largely by the buoyancy in agriculture market and improved performance of some commodity issues. An expectation of sustainability of the ongoing trend in the industrial activity, coupled with availability of finance at competitive rates has provided a fillip to offtake of new vehicles during the last six months.

"Crisil, however believes that the overcapacity situation in the trucking industry will remain critical for the performance of the truck finance companies," the rating agency added.