VRL Logistics Q4 Results Review - Strong Volumes Boost Goods Segment Revenue: Motilal Oswal

• VRL Logistics (VRL)’s revenue grew 18% YoY to ~INR7.0b (flat QoQ), largely led by higher volumes. This quarter includes revenue from Goods segment only.

• EBITDA margin stood at 16.3% in 4QFY23. The company has taken a price increase and also started bulk diesel procurement from Dec’22. Decent operating performance and lower tax outgo led to 17% YoY jump in APAT to INR610m. During 4QFY23, VRL added 47 new branches; with 184 branches being added in FY23. It aims to add 20-25 branches per quarter in FY24E.

• For FY23, revenue stood at INR26.5b (+17.9% YoY), EBITDA margin stood at 15.2% (-280bp YoY) and APAT was at INR 1.7b (+9.2% YoY).

• With the sale of the Bus and Wind energy business, VRL has now become a pure play Goods Transport (GT) operator. With addition of trucks in FY23, its total capacity has increased to 82,657 tonnes. Management has recently announced capex of INR4.8b, which would also be completed by end-FY24.

• VRL is not looking to increase freight rates as it is focusing on volumes and gaining market share by adding new branches. We raise our FY25E EPS by ~10% to factor in strong volume growth, expansion of branch network and improved industry outlook. Reiterate BUY with a revised TP of INR840 (based on 25x FY25E EPS).

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