VRL Logistics Q3 Results Review - Turnaround Visible; Key Will Be In Sustaining It: ICICI Securities

ICICI Securities Report

VRL Logistics Ltd.’s Q3 FY23 performance was inline with our estimates. Key takeaways:

1. volumes in goods transport segment surged to their all-time highs while decline in Ebitda/tonne was arrested;

2. goods transport business’ Ebitda margin expanded 90 basis points QoQ;

3. new branches added post-covid accounted for ~12% of total tonnage in Q3 FY23;

4. VRL Logistics reduced its debt by utilising the proceeds of divesting its non-core businesses; and

5. company announced buyback of up to 875,000 shares (0.99% of equity) at Rs 700/share through the tender offer route.

Looking ahead, we see VRL ticks all the crucial boxes – profitability improvement, volume growth and debt reduction. In our view, returns are likely to improve to similar levels as its asset-light peers.

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