Buy VRL Logistics; target of Rs 770: ICICI Securities

ICICI Securities's research report on VRL Logistics

VRL Logistics’ (VRL) Q4FY24 EBITDA was 12.4%/7.8% ahead of our/consensus estimates. Key points: 1) Shipments grew 9.6% YoY (better than expected). 2) EBITDA margin improved QoQ to 13.7% (Q3FY24: 12.8%) due to volume growth and decline in fuel cost. 3) New branches (opened in FY24) contributed 2.87% of overall volumes. 4) 83 new branches were added (net addition) in FY24. 5) VRL incurred capex of INR 2.9bn in FY24. For FY25, management has guided for: 1) volume growth of 12–15% in FY25. 2) 100 branch additions (50 branches in Q1FY25). 3) Capex of INR 3bn.

Outlook

Given the recent correction in the stock prices, we upgrade VRL to BUY from Add with an unchanged TP of INR 770/share based on 27x FY26E EPS.