Motilal Oswal's research report on VRL Logistics
VRL Logistics Ltd (VRL), with its large asset base of 4,816 trucks, continues to focus on the high-margin less-than-truck-load (LTL) segment. The trucks have a total carrying capacity of 71,056 tonnes. Additionally, the company also has good infrastructure setup including several owned premises comprising branches, offices and transshipment hubs. The market for organized players is likely to expand gradually as several commodities such as leather goods, betel nut, coconut products that were earlier transported by the unorganized players are now being transported by the organized ones. Reforms in the form of GST and e-way bills along with the impact of Covid-19 have led to the gradual improvement in share of organized logistics players as several small unorganized players moved out of the market. VRL is on track to capitalize on the growth opportunity in the LTL segment. It has rolled out a large capex plan to be completed within the next two years. The company is looking to add branches aggressively in areas where it has lesser presence, like eastern India, which would allow it to cater to higher volumes and capitalize on its existing network.
We forecast a revenue/EBITDA/PAT CAGR of ~19%/21%/20% over FY22-24, respectively. Maintain BUY with a TP of INR730 (premised on 28x FY24E EPS).
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