VRL Logistics- Muted Activity In Q1 Amid Polls, Driver Shortage; Volume Growth To Improve In H2: Motilal Oswal

Motilal Oswal Report

VRL Logistics Ltd.'s transition into a pure-play GT player, integration of additional branches, expansion of fleet capacity, growing customer base, and market share gains from less-organised competitors position the company favorably for steady volume growth and sustainable earnings growth.

While VRL Logistics faced growth challenges in recent past (due to elections and driver shortage), volume growth could improve materially in H2 FY25.

We expect VRL Logistics to report a 12% volume CAGR over FY24-26, with faster addition of branches in untapped regions. We anticipate the company to deliver a revenue/Ebitda/profit after tax compound annual growth rate of 14%/18%/51% over FY24-26.

We reiterate our Buy rating with a target price of Rs 660 (based on 28 times FY26E earnings per share).

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