VRL Logistics Ltd. is one of the leading surface logistics and parcel delivery service provider in India with its presence spread across 28 states and 4 union territories with branch network of approximately 624 branches in India. Apart from its logistics business, its other business segments include bus travel operation, wind power generation and air charting service.
Key Investment Arguments
- Large fleet of owned vehicles
- Hub-and-spoke operating model
- Cost benefit due to tie-ups and in-house maintenance facilities
Key Concerns
- Fluctuations in the prices of fuel and the ability to pass on the cost
- Risk of sufficient freight volumes and passenger occupancy
Valuations
At the offer price bands, the issue is available at P/E of 17.4x –18.3x its 9M-FY15 EPS (annualized) of `11.2. We believe the growth prospects for India’s road transport to improve as the government takes steps to increase investment in national highways. The company’s internal strengths such as large fleet of owned vehicles, wide distribution network & diversified customer base will enable the company to ride this wave of opportunity successfully. Hence, I recommend SUBSCRIBE to this issue.
