Buy VRL Logistics; target of Rs 780: Motilal Oswal

Motilal Oswal is bullish on VRL Logistics recommended buy rating on the stock with a target price of Rs 780 in its research report dated November 07, 2023.

Broker Research

November 10, 2023 / 14:09 IST

Buy

26 Aug, 2025 12:21

Volume

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Motilal Oswal's research report on VRL Logistics

VRL Logistics (VRL)’s 2QFY24 revenue grew 8% YoY/5% QoQ to ~INR7.1b (est. INR7.4b). Volumes increased by 8% YoY to 1.04m tons in 2QFY24; however, they were affected by the delay in the festive season by a month. Festive season-linked demand will drive strong volumes in 3QFY24. Realization stood at INR6,681 per ton (flat YoY/QoQ). EBITDA margins stood at 12.9% (est. 15.3%), affected by lower volumes, an increase in bulk fuel prices, and higher freight, handling and servicing costs. EBITDA stood at INR918m (est. INR1.13b). APAT declined 37% YoY to INR194m (est. INR394m) due to high operating costs, higher depreciation and interest expenses. Debt increased to INR2.9b as of Sep’23 from INR1.8b as of Mar’23 due to higher capex in 1HFY24. VRLL did not raise freight rates in 2Q as retail diesel prices remained stable. The company is looking to increase prices by 5-10% for contractual customers in 3Q, which should support margins.

Outlook

We cut our FY24E/FY25E EPS by ~25%/9% to factor in lower-than-expected volume growth and margins. We expect VRL to clock a CAGR of 15%/16%/21%/26% in volume/revenue/EBITDA/PAT over FY23-25. We retain our BUY rating with a revised TP of INR780 (based on 26x FY25E EPS).

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