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VRL Logistics – A Company Worth Looking At
VRL Logistics Story:
It is important to look at the company story before you make any kind of investment decision. This story reflects commitment for success. Dr. Vijay Sankeshwar founded VRL in 1976 in a small town of Karnataka with only one truck. Today, they spread out in 27 states and 4 union territories with 464 Buses and 3418 Trucks. VRL journey of 39 years is a success story sample.
Data as of Aug’14
About VRL Business:
VRL Logistics is a largest commercial fleet owner in India. They are into ground logistics, courier service, air chartering and cargo business, catering to industries like Food, Textiles, Apparel, FMCG and many others.
Logistics Industry Outlook:
Logistics industry is expected to grow by 13-15 per cent annually. This expectation is based on different factors like improvement in infrastructure, economic recovery and overloaded rail network. The other point is GST Bill (Tax Reform). This new tax reform will bring the estimated cost for Producer and Logistics companies down by 10-15 per cent, which would definitely reflect in their bottom line in coming years.
VRL Logistics Financials:
Net sales has grown at a CAGR of 18.9 per cent compared to FY2011 touching Rs 1400 cr. milestone in FY2014. Net profit has grown at a rate of 15.3 per cent (CAGR) compared to FY2011. There is dent in EBITDA margin for FY2014 compared to FY2011 but looks like they are on recovery mode in 2015. VRL has raised over Rs. 460 crore. through this public issue. Big players have invested in this company like Goldman Sachs bought over 29 lakh shares. VRL intention is to use this money to repay debt and buy more trucks to grow their business. All this is a good sign for traders.
Analysis indicate that Rs 294.1 stock price is on higher side compared to Transport Corporation of India (Industry Comparison).
VRL has been able to improve revenue and reduce cost due to their relationship with organization like Indian Oil, Ashok Leyland, Ceat and Volvo. VRL definitely is on right growth path and it won’t be surprising to see 15-17 per cent growth in FY2015 but in my opinion, they are trading on higher side (Rs 294.1) so I would recommend to buy this stock once it is in a range of Rs 230-240 and hold it for long term (2-3 years).
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