VRL Logistics - value unlocking due to promoter actions

Looking forward for buyback actions on February 6th…Good technical set up in charts too…!!
Disc : Invested from lower levels

VRL logistics in top gear to reach buy back price of 300… Eventually chart also suggests same level in very near term

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Agree - Goods transport is at its peak and probably will go beyond the peak next year, Buses are turning around and realisation will improve.

Logistics is a key recovery play - and 3rd core part of my portfolio after mid-cap banking / housing / real estate NBFCs and Construction plays

Considering the diesel prices are at roof level, any reduction in price going forward will favour the logistics companies such as VRL which has majority presence is in road transportation and “assuming” they have hiked freight charges as per fuel. Better road conditions and fast tag compulsory will also add bit more to their maintenance cost and margin from fuel point respectively…Any thoughts related to this from other members welcome.

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Does anyone have earnings call joining details on 3rd Feb? They havent put up call joining instructions in the communication uploaded on bse .

Q3’22 concall summary:
Margins improvement due to

  • Volumes improving – 4% increase
  • Freight rate improving – 1% increase

Realizations improved due to

  • Diesel as % of cost went down to 29.84%(12 rs reduction in diesel prices from October level)
  • Tyre cost reduced from 4.3% to 3.28%
  • Employee cost reduced to 13.85%
  • Vehicle maintenance reduced from 7.48% to 6.55%
  • Management said the margins will sustain across next qtr and double digit growth in tonnage.
  • Reduction in diesel will be offset by 10% increase in employee cost(hikes given in jan)

Other info provided by management:

  • Textile tailwinds helping VRL(tonnage contribution increased from 16%(q2) to 19%(q3)
  • Surat hub showed 20% growth YoY. 3lac+ ton
  • Tonnage from agri com increased from 8% to 10%
  • 400 cr annual cash profit can sustain both capex and dividend policy going further
  • Reliance retail added as a customer last year

Looks like the sectoral tailwind is helping VRL along with the asset ownership buss model providing decent operating leverage.

I think VRL will see a very, very sharp cyclical upturn in earnings. The management is sounding upbeat after a long time and are guiding volume growth of 15%. Trucking segment is one where unorganized to organized shift has been real, and the pandemic accelerated it.

Moreover, after a long time nw tariff rates are being set which are ~15-20% higher than hisorical rates. While at the moment this is just pass through of higher input costs, once the input prices stabilize we will see new cycle of profitability. (VRL used to make 16-18% pre-Ind AS 116 margins, which translates to ~20-22% of post Ind AS 116 margins.)

Last qtr’s result were phenomenal, and comapny achieved qtrly RoE of 38%! So, they are back to 25%+ annual RoE run-rate which will lead to re-rating. I am expecting EPS of Rs. 25.5/34.0 for FY23E and FY24E. You can give your own multiple.

What I like about the company is that it is a cash flow machine

FY17 FY18 FY19 FY20 FY21
Cash flow from operations 198.0 205.5 192.2 257.3 271.1
Capex -62.7 -47.34 -211.16 -122.73 -38.98
Free cash flow 135.3 158.1 -19.0 134.6 232.1
Market Cap 2,840 3,472 2,550 1,389 2,037
Free cash flow yield 4.8% 4.6% -0.7% 9.7% 11.4%

Recent updates:

• The company announced capex of Rs. 560 cr over next 8 months which involves scrapping and replacing existing vehicles and addition of pick-up vehicles to capture the demand of short-end cargo.
• Company has ~1200 vehicles (15 years+ with zero book value) which it’ll replace under scrappage policy. It’ll be able to book some profit on scrapping of these vehicles as incentives will be much higher compared to its existing book value.
• Company will also aggressively add 90-100 branches (current branch count 929) every year for next 2 years
• Majority of the capex will be spent from internal accrual as company is expected to generate operating cash flow of ~250-300 cr. And some portion of the capex will be met through debt. Company’s current D/E is comfortable at 0.25X.


Snippets from annual report and conf call:

  • Getting volumes from unorganized sectors due to enforcement of compliances like GST, eway bill
  • Addition of 91 branches, expansion to east and north eastern part
  • 1600 vehicle order with Ashok Leyland, Tata motors over 18 month horizon – (1300 – Tata and 300 – ashok)
  • No freight hikes after April ‘21 margin compression may happen due to fuel hike
  • 141 vehicles scrapped/sold and another 1265 vehicles > 15 years to be assessed for fitment ~ 18% of fleet capacity
  • 160 cr capex for the year – 125.5 cr on new vehicles and balance 34.5 cr on maintenance, land building
  • 91.24% of vehicles are debt free and 50.37% vehicles fully depreciated
  • Well diversified revenue – largest customer 1% and top 10 customer 3% of revenue
  • Availability of driver is the biggest problem across industry. VRL retains drivers by offering best in class salaries
    Industry overview:
  • Road transportation – 110B$ market – Less than truck load(LTL) where VRL is dominant 35% of the market
  • Less than 5 trucks owner have a major share showing the fragmented market – more than 50% market share
  • VRL is the biggest player with owned asset model with a capacity of 4816 vehicles and 71056 tons

Example of getting volumes from unorg sector like coconut, leather goods



Annual Report


Q1 FY 23 Result


Dear Mr Zaki_Ahmad,

What is the source of above graphics ? VRL placed a half page ad in Business Line recently wherein conspicuously projected only YOY figures and not the QoQ . QoQ speaks a lot . IMHO, Q4 must be traditionally best quarter for VRL as most of the government transfers takes place that time . Right ?!.

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Q3’22 management concall:

  • Company is net debt free. Invested 15cr in mut funds for tax purpose
  • Net debt was 46 cr as on Dec 31 and 134 cr as start of year. Net debt will not cross 50-60cr after capex
  • Increase in tonnage 10,10,000 tons growth of 15% over last year nos. Daily tonnage was 10,900 tons
  • Few sectors below have shown tremendous growth over last year
Sector Growth over last year
Agri products, equipment 47%
Automobile 25%
Education 31%
FMCG 23%
Footwear 36%
Metals, hardware 28%
  • 5% rate increase for non-contractual tonnage ~ 65%( if costs are constant, this is 300 bps margin accretive)
  • Started bulk fuel procurement mid-dec, 2rs cheaper than retail
  • Lorry hire will not go beyond 10-12% if revenue.
  • Not taking price hikes in new markets to gain market share
  • 12% of volume was from branch addition in last 2 years
  • Capex of 1600 vehicles out of which received delivery of 800 vehicles and other 800 by September
  • Promoter will participate in buyback
  • Unorganized sector like dryfruits, leather, coconut will lead the 15-20% annual growth

VRL Logistics Q4FY23 Concall Summary

20% plus tonnage growth which usually never exceeds mid single digits after a long time. Is something changing?


Any one tracking this company? What’s the reason of the recent sellof?

Is anyone tracking CARGOSOL logistics?
Promoter accumulation is it real.