VRL Logistics Q3 Results Review - Subdued Demand In Southern States Impact Tonnage Growth: Motilal Oswal

Motilal Oswal Report

VRL Logistics Ltd.'s Q3 FY24 revenue grew 8% YoY/4% QoQ to ~Rs 7.4 billion (estimates Rs 7.7 billion). Volumes increased 8% YoY to 1.09 million tons in Q3 FY24. The sluggish demand in southern states, attributed to an unfavorable spread of the monsoon, affected volume growth. Realisation per ton stood at Rs 6,669 (flat YoY and QoQ).

Ebitda margins stood at 12.8%, against our estimate of 14.0%. The margins were adversely impacted by higher employee costs. Further, increased costs have not been passed on to customers, leading to pressure on Ebitda margins. Ebitda stood at Rs 944 million (13% below our estimate of Rs 1.08 billion).

Adjusted profit after tax declined 64% YoY to Rs 137 million (versus our estimate of Rs 335 million). Weak operating performance, higher depreciation, interest expense, and lower other income dragged APAT.

We expect VRL to clock a compound annual growth rate of 13%/14%/14%/16% in volume/revenue/Ebitda/PAT over FY23-26.

We retain our 'Buy' rating with a revised target price of Rs 820 (based on 28 times FY26E earning per share).

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