Buy VRL Logistics; target of Rs 840: Motilal Oswal

Motilal Oswal is bullish on VRL Logistics recommended buy rating on the stock with a target price of Rs 840 in its research report dated May 22, 2023.

Broker Research

May 24, 2023 / 22:46 IST

Buy

Motilal Oswal's research report on VRL Logistics

VRL Logistics (VRL)’s revenue grew 18% YoY to ~INR7.0b (flat QoQ), largely led by higher volumes. This quarter includes revenue from Goods segment only. EBITDA margin stood at 16.3% in 4QFY23. The company has taken a price increase and also started bulk diesel procurement from Dec’22. Decent operating performance and lower tax outgo led to 17% YoY jump in APAT to INR610m. During 4QFY23, VRL added 47 new branches; with 184 branches being added in FY23. It aims to add 20-25 branches per quarter in FY24E. For FY23, revenue stood at INR26.5b (+17.9% YoY), EBITDA margin stood at 15.2% (-280bp YoY) and APAT was at INR 1.7b (+9.2% YoY).

Outlook

VRL is not looking to increase freight rates as it is focusing on volumes and gaining market share by adding new branches. We raise our FY25E EPS by ~10% to factor in strong volume growth, expansion of branch network and improved industry outlook. Reiterate BUY with a revised TP of INR840 (based on 25x FY25E EPS).

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