Buy VRL LOGISTICS target 660 : Motilal Oswal
Motilal Oswal recommends VRL Logistics for purchase at ₹660 due to strong growth prospects, improved logistics demand, and operational efficiency.
About Vrl Logistics :
VRL Logistics is a prominent logistics and transportation company in India. Established in 1976, it has become a key player in the industry. With its headquarters in Hubballi, Karnataka, the company operates a vast network across the country, providing services such as goods transportation, passenger transportation, and courier services. VRL Logistics is known for its extensive fleet of trucks, buses, and delivery vehicles, ensuring efficient and reliable services. It has a strong presence in both urban and rural areas, making it an important link in the supply chain for various industries. The company has diversified its operations, invested in technology, and expanded its service offerings to meet market demands. Its commitment to innovation and customer satisfaction has helped it maintain a competitive edge in the logistics sector.
VRL Logistics Implements Price Hike to Counter Rising Costs, Boost Margins from 2QFY25:
In a strategic move to combat rising operational costs, VRL Logistics has implemented a 10% price hike for spot customers starting in June 2024, with a blended hike of 6% after negotiations. This marks the first price increase after several quarters, addressing the surge in toll charges, labour costs, and other expenses. The price adjustment is expected to positively impact VRL Logistics’ margins beginning in the second quarter of FY25. This proactive measure is seen as a significant boost for the company, ensuring profitability and sustainability in a challenging economic environment.
VRL Logistics Expands Branch Network in Untapped Regions to Drive Growth :
VRL Logistics is aggressively expanding its branch network to fuel growth, adding 560 branches and five transshipment hubs from April 2021 to 1QFY25. As of June 2024, the company operates 1,245 branches and 50 transshipment hubs, with plans to add 100 more branches in FY25, focussing on the eastern and northeastern regions. This strategic expansion has enabled VRL Logistics to capture market share, contributing to faster growth compared to peers. By targeting untapped regions, the company aims to boost volumes and strengthen its position as a leading player in the Indian logistics industry.
VRL Logistics Set for Strong Growth: Buy with a Target Price of ₹660 :
Despite recent growth challenges, VRL Logistics is poised for a strong recovery. With volumes picking up in July 2024 and favourable monsoons boosting agricultural and textile commodities, the company expects improved margins through price hikes. VRLL is projected to achieve an 11% volume CAGR over FY24-26, driven by strategic branch expansions in untapped regions. Analysts forecast a CAGR of 14% in revenue, 18% in EBITDA, and 52% in PAT over the same period. With these positive developments, Motilal Oswal reiterates a buy rating for VRL Logistics, setting a target price of ₹660 based on 28x FY26E EPS.
Disclaimer: This blog post discusses the risks associated with investing in the stock market and emphasizes the importance of conducting thorough research and seeking professional advice. It is not intended as investment advice and should not be relied upon for making investment decisions. The article serves as a general information resource and highlights the need for careful consideration and planning when investing.
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