VRL Logistics Ltd. share price target

VRL Logistics’ (VRL) Q4FY24 EBITDA was 12.4%/7.8% ahead of our/consensus estimates. Key points: 1) Shipments grew 9.6% YoY (better than expected).

VRL Logistics (VRL)’s 4QFY24 revenue grew 10% YoY/4% QoQ to ~INR7.7b (in
line with our estimate). Volumes increased ~10% YoY to 1.13m tons in
4QFY24.

VRL Logistics’ (VRL) Q1FY24 performance missed our and street estimates by 3% and 8% respectively owing to lower volumes. Key takeaways: i) one-off factors impacted volumes by 4%; 2) realisation stayed flat QoQ as the company kept its pricing strategy unchanged; 3) capex in Q1FY24 was at INR 870mn, mainly due to addition of new vehicles; 4) fuel sourcing from refineries increased resulting in cost advantage.

VRL Logistics’ (VRL) Q4FY23 performance was in line with our estimates. Key takeaways: i) EBITDA margin of GT segment expanded 30bps QoQ to 16%; ii) volume rose 16% YoY (2.2% QoQ) at 1,031kte; 3) added 57 new branches in Q4FY23; 4) net debt rose Rs381mn YoY owing to buyback of shares amounting to Rs613mn in Q4FY23.

VRL Logistics’ (VRL) Q3FY23 performance was in line with our estimates. Key takeaways: i) volumes in goods transport (GT) segment surged to their all-time highs while decline in EBITDA/te was arrested; ii) GT business’ EBITDA margin expanded 90bps QoQ; iii) new branches added post-covid accounted for ~12% of total tonnage in Q3FY23.

VRL Logistics’ (VRL) Q2FY23 result has undershot street estimates. Key takeaways: i) Volumes in goods transport (GT) segment rose 14% YoY and 7% QoQ.

VRL Logistics’ (VRL) overall performance in Q1FY23 was in line with our expectations.

VRLL has announced a purchase of 1,600 customized trucks (with ~25,000t capacity) comprising 1,000 trucks of TATA LPT 2818 make, 200 trucks of TATA LPT 1415 make, 100 trucks of TATA 610 SFC make, 200 trucks of Ashok Leyland 1920 make and 100 trucks of Ashok Leyland 4620 make with a total capex of INR5.6b spread over the next 12-18 months....

New branch additions to support volume growth We attended VRLL's investor call to get a sense of the recent developments and business outlook in the Logistics sector. The management touched upon various aspects like: a) volume movement in recent times, b) rising fuel prices, c) branch addition strategy, and...

We hosted the management of VRLL to get an understanding of the current business scenario and its outlook. The management is optimistic on VRLL's growth prospects over the next couple of years. A shift towards the organized sector would result in robust business opportunities for the larger players in this space. In the near term, stabilization of fuel prices and improved volumes will benefit this sector. VRLL is focusing on the high-margin LTL business (driven by the B2B segment) and is expanding its network into newer markets. We expect VRLL to clock a revenue/EBITDA/PAT CAGR of ~19%/19%/45% over FY2124E. We reiterate our Buy rating, with a TP of INR540/share (35x FY24E EPS)....

We released our Logistics thematic report recently (Report link), wherein we highlighted that a) the Logistics sector is set to move towards formalization and b) there would be strong growth opportunities for some of the established players in this space. With a robust growth outlook, we expect strong upside in the stock from current levels. The strong tailwinds for VRL would drive consistent growth in volumes and earnings over the next few years. The company would benefit from a) the uptick in economic activity, b) the general price hikes taken post 1QFY22, and...