VRL Logistics rises 20% as promoters scrap flying plans

Investors of VRL Logistics are rejoicing at its decision to drop much-debated aviation business foray. Shares of the company rallied 20 percent intraday on Thursday.

In a statement to exchanges the company said, "Regional connectivity related aspects listed in the said policy do not auger well with our planned business model envisaged for the proposed activity."

Earlier in May, the company had announced its desire to enter aviation space with Chairman Vijay Sankeshwar and Managing Director Anand Sankeshwar incorporating a separate company for a regional airline. Analysts were worried that even though aviation business is in personal capacity, promoters may dilute stake in VRL Logistics to raise funds. The stock had taken severe beating post that, falling 21 percent from May 23 to July 20.

Betting on the new decision, Prabhudas Lilladher says it removes overhang of promoter diversification into an unrelated business. "A business where long term growth and return prospects have not been proven, puts increased supply of equity on the back-burner and focus to shift back at growth opportunities in goods transport and bus transport segment," it says in a report.