Buy VRL Logistics, target price Rs 770: ICICI Securities

ICICI Securities has buy call on VRL Logistics with a target price of Rs 770. The current market price of VRL Logistics Ltd. is Rs 624.45. Time period given by analyst is one year when VRL Logistics Ltd. price can reach defined target.

VRL Logistics Ltd., incorporated in the year 1983, is a Small Cap company (having a market cap of Rs 5477.30 Crore) operating in Logistics sector.

VRL Logistics Ltd. key Products/Revenue Segments include Income From Transportation Services, Income From Travel Operations, Income (Airlines), Power, Services (Courier), Scrap, Service (Hotel) and Income From Advertisement for the year ending 31-Mar-2020.


Financials
For the quarter ended 31-03-2022, the company reported a Standalone Total Income of Rs 671.75 Crore, down -1.69 % from last quarter Total Income of Rs 683.30 Crore and up 11.40 % from last year same quarter Total Income of Rs 603.02 Crore. Company reported net profit after tax of Rs 56.19 Crore in latest quarter.

Investment Rationale
VRL Logistics’ (VRL) overall performance was in-line with expectations in Q4FY22, with EBITDA margin of ~18.9%. Top line grew 10.7% YoY and EBITDA was up 31.5% YoY. Reduction in overall operating costs and strong volume growth in good transportation (GT) segment allowed VRL to further improve on gross margin at 35%. YoY volume growth in GT segment still remains strong in mid-teens. The company has guided for 20-25% increase in tonnage in FY23. Number of GT vehicles have increased by 110 (net) during Q4FY22; EBIT/vehicle is Rs7mn/vehicle, down from an all-time high of Rs7.9mn/vehicle in Q3FY22. Further, the company plans to add ~1,600 new vehicles over the next 12–18-months, majority of which will be funded through internal accruals with external debt to the tune of ~Rs1-1.5bn. Passenger transport (PT) revenue also witnessed a strong rebound with 10.7% YoY growth in Q4FY22, thereby, maintaining positive EBITDA. It maintains BUY on the stock with a revised target price of Rs770/share (Rs600/share earlier), valuing the stock at FY24E 20x P/E valuation multiple.

Promoter/FII Holdings
Promoters held 69.59 per cent stake in the company as of 31-Mar-2022, while FIIs owned 3.62 per cent, DIIs 15.14 per cent.