Investment Recommendation

VRL Logistics Ltd 

VRL Logistics Ltd – IPO Note

Price Band – Rs.195-Rs.205

Recommendation – SUBSCRIBE to the issue for listing gain as well as long term investment

 

VRL logistics Ltd (VRL) , a Karnataka based company is one of the leading pan-India surface logistics and parcel delivery service providers. VRL enjoys a wide distribution network in 28 states and 4 union territories comprising of 624 branches( incl 48 hubs) and 346 agencies. The company has its in-house preventive maintenance facility at Hubballi, Karnataka. In goods transport business the company serves a wide range of customers like FMCG, Imperishable goods, pharmaceutical products , machines etc
 
Between FY10-14 VRL’s revenues grew at CAGR of 20.4% while EBIDTA grew at a CAGR of 10.7%. Going forward, with high capex and increase in number of vehicles, we expect the company to continue exhibiting high growth trend and Lower fuel prices would support to the increase in margin. Moreover, the high growth in the industry coupled with shift from unorganized to organized player will also fuel and support growth for company. On the valuation front, at the given upper band price of issue of Rs 205, VRL is offered at PE of 19.6 its post issue diluted FY15 EPS and 7.6x of its FY15 EV/EBIDTA which is lower than its peer. We recommend subscribing to the issue for listing gain as well as long term investment.