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Motilal Oswal Initiates Buy Call For This Logistics Stock, With Target Price At Rs. 540

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Brokerage firm Motilal Oswal recommends investors buy the stocks of VRL Logistics (VRLL) with a target price of Rs. 540. The excise duty cut by the union government in November, 2021 was followed by tax cuts by states; as a result, the motor fuel prices dropped an average of Rs. 12-13/L. "The price reduction is benefitting the company as volumes continue to remain strong, leading to elevated freight rates," Motilal Oswal thinks.

 

Target Price

Target Price

The Current Market Price (CMP) of VRL Logistics (VRLL) is Rs. 467. The brokerage firm, Motilal Oswal has estimated a Target Price for the stock at Rs. 540. Hence the stock is expected to give a 16% return, within 1 year.

Stock Outlook
Current Market Price (CMP)Rs. 467
Target PriceRs. 540
1 year returns16.00%

Company performance
 

Company performance

VRL Logistics' net sales stood at Rs. 17.6 b, which is expected to grow to Rs. 23.1 b in FY 22. The company's EBITDA stood at Rs. 2.5 b, which is expected to grow to Rs. 3.6 b. The company's adjusted PAT stood at Rs. 0.5 b, which is expected to grow to Rs. 1.2 b. Commenting on the company's expected growth trajectory, Motilal Oswal said, "GST compliance, a higher cost structure, and the Covid-19 outbreak are impacting unorganized players, which constitute 80-85% of the Truck Logistics market in India." So, that can eventually play an affirmative role for VRL.

Comments by Motilal Oswal

Comments by Motilal Oswal

Maintaining a buy rating, Motilal Oswal," In the near term, stabilization of fuel prices and improved volumes will benefit this sector. VRLL is focusing on the high-margin LTL business (driven by the B2B segment) and is expanding its network into newer markets."

"We hosted the management of VRLL to get an understanding of the current business scenario and its outlook. The management is optimistic on VRLL's growth prospects over the next couple of years. A shift towards the organized sector would result in robust business opportunities for the larger players in this space," the firm added.

About the company

About the company

Founded in 1976, VRL is a public listed company on the NSE and BSE Exchange with a Market capitalization of Rs. 24.92 billion (as on 30th June, 2021). VRL is one of the front runners in the Indian Passenger Travel Industry amongst the private sector players. The company's services are spread across 22 states and 4 Union Territories, and 3PL and Warehousing Solutions nationwide.

(Also read: 3 Best Mutual Fund SIPs In ELSS (Tax-Savings) Category, 4 Star Rated By Value Research)

Disclaimer

Disclaimer

The above stock was picked from the brokerage report of Motilal Oswal. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.

Story first published: Saturday, January 8, 2022, 0:30 [IST]
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