VRL Logistics - Recent Price Hike To Support Margins; Branch Expansion To Drive Volume Growth: Motilal Oswal

Motilal Oswal Report

While VR L Logistics Ltd. faced growth challenges in the recent past due to elections and driver shortages, volume growth could improve going forward. Volumes picked up in July 2024, and with good monsoons, the pickup in agricultural and textile commodities should boost volumes.

Further, with price hikes across commodities and customers, margins should also improve going forward.

We expect VRL Logistics to report an 11% volume compound annual growth rate over FY24-26, with faster branch additions in the untapped regions. We estimate the company to deliver a CAGR of 14%/18%/52% in revenue/Ebitda/profit after tax 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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