Buy VRL Logistics; target of Rs 680: Motilal Oswal

Motilal Oswal's research report on VRL Logistics

VRL Logistics (VRL)’s 4QFY24 revenue grew 10% YoY/4% QoQ to ~INR7.7b (in line with our estimate). Volumes increased ~10% YoY to 1.13m tons in 4QFY24. The sluggish demand in Southern States affected volume growth during the quarter. Realization per tonne stood at INR 6,724 (+1% YoY and QoQ).EBITDA margins stood at 13.7%, against our estimate of 13.3%. Lower volumes and higher employee costs adversely impacted the margins. Further, increased costs have not been passed on to customers, leading to pressure on EBITDA margins. EBITDA stood at INR1.05b (in line with our estimate).

Outlook

We expect VRL to clock a CAGR of 13%/15%/19%/54% in volume/revenue/EBITDA/PAT over FY24-26. We retain our BUY rating with a revised TP of INR680 (based on 28x FY26E EPS).