Motilal Oswal bullish on this stock; sees over 50% upside






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Motilal Oswal bullish on this stock; sees over 50% upside

Shares of VRL Logistics Limited have delivered more than 90 per cent return in the last one year and according to Motilal Oswal, the stock still has an upside potential of more than 50 per cent.

The brokerage house has a ‘Buy’ rating on the stock with a target price of Rs 690 per share. The stock rose 2 per cent to hit an intraday high of Rs 454.2 on BSE. With a market capitalisation of Rs 4,047 crore, the shares stand higher than 5 day, 20 day and 200 day moving averages but lower than 50 day and 100 day moving averages.

Motilal Oswal noted that VRL Logistics is well placed given its strong presence in the less than truckload (LTL) segment, focus on branch addition, and tight cost control. Its comfortable Balance Sheet position and strong cash flow generation will enable it to meet its capex requirements for future growth, it said.

It highlighted that the company is aggressively pursuing branch expansion, which will aid higher volume growth. Also, the company is on track to open 90-100 branches in FY22 and aims to open a similar number of branches in FY23.

The management expects 15-20 per cent volume growth going forward, driven by new branch additions, higher demand from new end-use industries, and a shift towards the organized sector.

“With a pickup in demand and branch additions in untapped regions, we expect the company to clock 21 per cent revenue CAGR over FY21-24E. With robust volume and cost efficiency measures, it will be able to maintain its EBITDA margin profile at 16 per cent over the next two years,” it added.

The brokerage house expects the company to clock a revenue/EBITDA/PAT CAGR of around 21/26/65 per cent over FY21-24E. The stock trades at 19x FY24E EPS.

In the December quarter, the firm reported a 52 per cent jump in net profit to Rs 60 crore against Rs 39.7 crore in the corresponding quarter of the previous fiscal.

Net sales jumped 20 per cent to Rs 678.39 crore in the last quarter against Rs 563.42 crore in the December quarter of 2020.

VRL Logistics is a logistics and transport company that is also currently the largest fleet owner of commercial vehicles in India. The company has spread its operations to Courier Service, Priority Cargo and Transport of Passengers by Air.

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