*VRL Logistics Q4FY21 result update: Volume and margin recovery in goods segment. Maintain BUY*
• Revenue up by 20.6%yoy (up 6.5% qoq) to Rs 6.0bn, Profit increased from Rs 21mn in 4QFY20 to Rs 372mn in 4QFY21 vs estimates of Rs 404mn.
• VRL completed the buyback of 2mn shares for average price of Rs 253 per share & utilizing Rs 498mn. Promoter holding increased from 68.05% to 69.59% post buy pack.
• VRL is expected to benefit from scrapping policy due to
(1) own fleet as outsourcing would be difficult for industry players
(2) vehicles older than 9 years are fully depreciated for VRL
(3) post scrappage the useful spares can be used for existing vehicles
(4) realization of salvage value would be an additional income for VRL
• Cash generation from operation remained healthy at Rs 2.7bn in FY21 compared to Rs 2.57bn in FY20 and net debt declined from Rs 1.8bn in FY20 to Rs 1.0bn in FY21.
• Expect lower capex of Rs 650mn in FY22 mainly in goods segment.
•We maintain valuation to 20xFY23 earnings with target price of Rs 340