The shares of the Logistics company provide a wide range of logistics and transportation services across India. This article explains how they outperformed in the latest quarter, future plans, and their financials.
Price action
With a market capitalization of Rs. 4,065.10 crores on Wednesday, the shares of VRL Logistics declined upto 1.85 percent, making a low of Rs. 463.30 per share compared to its previous closing price of Rs. 473.50 per share.
Company Overview
VRL Logistics Limited, established in 1976 by Vijay Sankeshwar, is a prominent Indian logistics and transportation company headquartered in Hubballi, Karnataka. Operating across 24 states and five union territories, VRL offers a diverse range of services, including goods transportation, courier services, passenger bus operations, and aviation logistics.
They are Renowned for owning one of the largest fleets of commercial vehicles in the private sector, the company maintains a strong presence with over 1245+ branches, hubs, and transport yards nationwide. In addition to its core services, VRL Logistics has diversified its operations to include aviation logistics, offering chartered flight services for corporate, leisure, and special mission sectors.
Reason the Outperformance
They implemented effective freight hikes, resulting in higher realizations and improved margins. The freight hikes were applied across all sectors and geographies, leading to increased realization while maintaining tonnage.
The management implemented strategic cost controls, including bulk fuel purchases, reducing fuel costs from Rs. 89 to Rs. 84 per litre, and decreasing fuel costs as a percentage of revenue from 30 to 26 percent.
Operational efficiency was enhanced through route mapping, minimizing transshipment hubs, and increasing vehicle utilization, which led to a reduction in the frequent loading and unloading of consignments. Reduced reliance on hired vehicles resulted in a drop in lorry hire charges from 7 to 5 percent of revenue.
Investment and Capex
The company has made a significant Rs. 231 crore investment in the Bangalore Transport Hub, funded by low-cost debt and internal accruals. The 1,12,000 square meter facility provides benefits like Rs. 15 crore annual rent savings and Rs.1.5 crore in rental income. Additional investments of Rs. 43 crore in Mangaluru and Rs. 21 crore in Mysore were made to expand transshipment facilities.
Future Outlook
The Management expects revenue growth of 12-13 percent for FY26, driven by freight rate increases and volume growth. They anticipate an 8-10 percent volume growth, with rate stabilization fostering broader customer acceptance. Despite the current high margins of 21 percent, EBITDA margins are expected to stabilize around 18 percent.
Recent Quarter Highlights
In Q3 FY25, it saw a strong performance with significant revenue growth and improved profit margins. Freight rates increased by 11 percent, from Rs. 6,670 to Rs. 7,390 per ton, while volume growth was modest at 1 percent. EBITDA rose by 78 percent, from Rs. 97 crores to Rs. 172 crores, with margins improving from 13 percent to 21 percent. Net profit surged as margins increased from 1.8 percent to 7 percent.
Financials
The company’s revenue rose by 12.42 percent from Rs. 739.08 crore to Rs. 830.9 crore in Q3FY24-25. Meanwhile, Net Profit increased 335 percent from Rs. 13.65 crore to Rs. 59.42 crore during the same period.
Written by Sridhar J
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