Buy VRL Logistics Ltd For Target Rs.580 - Motilal Oswal
Follow us Now on Telegram ! Get daily 10 - 12 important updates on Business, Finance and Investment. Join our Telegram Channel
https://t.me/InvestmentGuruIndiacom
Download Telegram App before Joining the Channel
Progressing at full throttle
* VRL Logistics (VRL) is an established logistics operator primarily focusing on the high-margin LTL segment (90% contribution from LTL and 10% from FTL in FY21). VRL is one of the largest asset owners in the industry and is well placed to capitalize on the growth opportunity presented by the logistics sector.
* VRL derived ~90% of its business from the Goods Transport (GT) segment, followed by 7% contribution from the Passenger Bus Service segment in FY21. Unlike its peers, VRL operated its own fleet of 4,687 trucks (capacity: 69,011t) and 280 buses at end-2QFY22.
* VRL uses biodiesel (15-25% of its fuel requirement) which helps it reduce fuel costs by INR3-4 per liter. Being the owner of a large fleet, VRL is able to negotiate for spare parts and maintenance-related costs better and provide enhanced service to its well-diversified client base.
* With robust volumes, expanding branch network and the improved cost efficiency measures, we expect VRL to clock a revenue/EBITDA/PAT CAGR of ~19%/22%/56%, respectively, over FY21–24. We reiterate our BUY rating on the stock with a TP of INR580 premised on 30x FY24E EPS, implying 33% potential upside.
* Key risksto our call: a) sharp increase in fuel pricesto impact profitability; b) any transport-related restriction due to COVID, would affect the sector negatively
To Read Complete Report & Disclaimer Click Here
For More Motilal Oswal Securities Ltd Disclaimer http://www.motilaloswal.com/MOSLdisclaimer/disclaimer.html SEBI Registration number is INH000000412
Above views are of the author and not of the website kindly read disclaimer
