Brokerage firm Motilal Oswal recently hosted the management of VRL Logistics In order to gain an understanding of the current business scenario and its outlook, the management looked optimistic on VRLL’s growth prospects over the next few years, the brokerage said in a note.
The company has introduced an average speed system in which drivers who maintain a higher average speed are paid more. This has helped in covering longer distances in limited time. The volume itself increased, resulting in higher utilization levels and reduced turnaround times, the note highlighted.
The brokerage maintains its buy rating on Multibagger stock, which has risen over 126% in the one-year period, with a revised target price. 540 per share.
The Textile/Agriculture/Auto segment contributes 18-19%/8-9%/5-6% to the revenue. Textiles, agricultural commodities and industrial components have seen improvement in revenue contribution in the last one year.
“With the pick-up in demand and branch additions in untapped areas, we expect VRL Logistics to achieve 19% revenue CAGR (Compound Annual Growth Rate) in FY 2011-24E. With strong volume and cost efficiency measures, VRLL will be able to maintain its EBITDA margin profile at 14-15% over the next two years,” Motilal Oswal’s note said.
VRLL seeks to acquire warehouse space in Bengaluru 1.7 billion. This document is pending for approval and may take time to materialise. capex will be between 1 billion more 1.5 billion in FY22. According to the brokerage, the internal earnings are sufficient to fund the capital expenditure.
Management plans to open 100 branches in the unexplored locations of North and Northeast India in FY 2012. About 50-55 branches have already been opened, and the rest will be opened in the next 3-6 months.
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
Never miss a story! Stay connected and informed with Mint.
download
Our App Now!!
,