VRL Logistics’ (VRL) Q3FY25 EBITDA performance was 26%/23% ahead of our and consensus’ numbers. Key points: 1) Realisation (up 10% YoY) led improvement in both EBITDA and EBITDA margin; 2) volume grew 1% YoY/QoQ (9MFY25: 4% YoY). 3) Incurred capex of INR 2.8bn in Q3 (9MFY25: INR 4bn); 4) 64 new branches were added in 9MFY25 (closed 25; net addition 39); plans to add 80-100 branches in FY26. Taking cognisance of 9M performance, we raise FY25E EPS by 13%, however, lower it by 9.3% for FY26E owing to higher interest and depreciation. We roll-forward valuation to FY27E with a revised TP of INR 700 (earlier: 655) on an unchanged multiple of 27x. Maintain BUY.
OutlookWe roll-forward valuation to FY27E with a revised target price of INR 700 (earlier: 655) on an unchanged multiple of 27x. Maintain BUY and recommend VRL as our top pick among surface logistics players.
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