VRL Logistics Ltd. share price target

We recently met the management of VRL Logistics, one of the leading pan-India surface logistics & parcel delivery less than truck (LTL) service providers. We wanted to understand the company's business model and the opportunity available to VRL post implementation of the Goods & Service Tax (GST). VRL is mainly engaged in domestic transportation of goods across India. Its other business include bus operations, air chartering service and sale of power. Goods transportation (78% of total revenues in FY16) remains the key revenue driver for VRL. It is currently...

Key highlights: Revenue was up 2.3%yoy to Rs. 4.6bn, inline with our estimates. Goods transport (GT) (78% of revenue) reported revenue growth of 4.2%yoy while bus segment (20%ofsales)revenuedeclinedby3.7%yoytoRs912mn.EBITDAdeclinedby20%yoytoRs 670mn,lowerthanestimatesofRs750mn.EBITDAmarginsdeclinedby412bpsyoyto14.6% inQ1FY17.EBITDAmarginsingoodtransportdeclinedby280bpsyoyto12.9%whileinbus segment,marginsdeclinedby620bpsyoyto22.4%inQ1FY17.Margindeclinewasmainly duetoloweravailabilityofbiodieselandcostinflation.Employeecostincreasedby26%yoy toRs661mnduetoincrementin2QFY16.Interestcostdeclined36%yoytoRs67mnwith...

Key highlights: Revenue was up 4.6%yoy to Rs. 4.2bn, inline with our estimates. Goods transport(GT)(78%ofrevenue)reportedagrowthof6.9%whilebussegment(20%ofsales) revenue declined by 5%yoy. Higher driver's salary resulted in 153bps reduction in EBITDA...

Key highlights: Revenue remained flat yoy, almost 6% lower than estimates. Goods transport(GT)(78%ofrevenue)reportedmarginalgrowthof1.8%whilebussegment(20% of sales) revenue declined by 5% with fleet reduction. Higher lorry hire charges to cater...

During Q2FY16, the revenue of the company declined by 1.2% to Rs. 4272 Mn on YoY basis. Fall in the revenue was largely due to passenger segment where the management continued with its consolidation activities and made no replacement for the buses going off-road on permit expiry. The revenue growth in the goods transportation segment also remains flat on account of delay in the festive season and de-growth in the agriculture.

Key highlights: Sluggish monsoons and delay in festive season (Diwali in November this year), caused lower offtake in good transport (GT) business leading to flat revenues. Bus operationrevenuefell5%,asthenumberofVRL'sbusesreducedto368.Declineindiesel...

Revenue to grow at CAGR of 11%: The company's goods transportation division has strong pan India presence covering 28 states, 4 union territories and more than 662 cities with the help of more than 1000 branches and franchisees; and 48 strategically located transshipment hubs. Going forward, the company is planning to add 300 trucks in this division and is also planning to strengthen its infrastructure in its existing market in the southern and western regions of India; and expand into northern and eastern regions. On this backdrop, we expect the division to report average revenue growth of 14% in the next two years. In the passenger segment, the company is going slow and is consolidating its position; and focusing on premium routes, thus we expect flat 2% average growth in this division.

VRL Logistics Ltd (VRL) is one of the leading pan-India logistic and parcel delivery service provider. It operate largest fleet of ~4,000 vehicles including 3,546 goods carrier and 455 passenger buses with 624 branches and 346 agencies. The company provides General Parcel...