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Review By Dilip Davda on April 7, 2015
VRL Logistics Ltd (VRL) is one of the leading pan-India surface logistics and parcel delivery service providers. It owns and operates the largest fleet of commercial vehicles in the private sector in India. VRL provides general parcel and priority parcel delivery (less than truckload services, “LTL”), courier and full-truckload (“FTL”) services through its widespread transportation network in 28 States and four Union Territories across India. Company’s operational infrastructure for the goods transportation business as of December 31, 2014 comprised 624 branches (comprising 604 leased branches and 20 owned branches) and 346 agencies across India, and of such 624 branches, 48 (41 leased branches and seven owned branches) served as strategic transshipment hubs for operations.
VRL’s goods transportation service business serves a broad range of industries, including the fast moving consumer goods (FMCG) sector as well as other industries including food, textiles, apparel, furniture, appliances, pharmaceutical products, rubber, plastics, metal and metal products, wood, glass, automotive parts and machinery. The company operates through a hub-and-spoke operating model which enables us to transport various parcel sizes and provide its customers with access to multiple destinations for booking and delivery of goods. Its extensive network enables the company to provide “last mile” connectivity to even remote areas in India.
As of December 31, 2014, company’s goods transportation fleet included 3,546 owned vehicles. Thus its own large fleet enables it to reduce our dependence on hired vehicles, retain control of the value chain and service quality, and establish a reputation for reliable and timely delivery of consignments. The variety of goods transportation vehicles in company’s fleet also enables us to serve a diverse mix of consignments.
To dilute its 25% stake for listing of its shares as well as to meet financing of the company is offering 23116000 equity share of Rs. 10 each in a price band of Rs. 195-205. The issue contains fresh equity of 6000000 equity shares and 11716000 equity shares by way of offer for sale by promoters and P/E fund. Thus the net accrue to company’s fund will be around Rs. 117 crore. Total issue size with offer for sale is Rs. 451-474 crore based on lower and upper price band. The issue is lead managed by ICICI Securities Ltd jointly with HSBC Securities and Capital Markets (India) Pvt Ltd. Karvy Computershare Pvt Ltd is the registrar to the issue. Issue opens for subscription on 15.04.15 and will close on 17.04.15. Minimum application is to be made for 65 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE and NSE. Its current equity capital of Rs. 85.54 crore will rise to Rs. 91.54 crore approx. On 15.02.97 the company has issued bonus shares in the ratio of 78 for 1, on 18.03.97 again it issued bonus shares in the ratio of 0.992 for 1 and on 09.12.2006 it issued bonus shares in the ratio of 5 for 2. Thereafter in September 2007 and September 2013 it made preferential allotment at a price of Rs. 100 and Rs. 74.46 per share.
Goods transportation is our primary business and revenue from such business in fiscal 2012, 2013, 2014 and the nine months ended December 31, 2014 was Rs. 8,58.51 crore, Rs. 9,87.81 crore, Rs. 11,28.12 and Rs. 9,71.48 crore, respectively, representing 75.95%, 74.52%, 75.52% and 76.27%%, respectively, of company’s total revenue from operations in referred periods. General and priority parcel services represented 91.75%, 89.15%, 88.51% and 86.43%% of its goods transportation revenue in fiscal 2012, 2013, 2014 and the nine months ended December 31, 2014, respectively.
On overall performance front, the company posted turnover and net profits of Rs. 1135.28 cr/Rs. 76.72 cr., (2012), Rs. 1335.32 cr./Rs. 45.70 cr., (2013), Rs. 1503.78 cr./Rs. 57.18 cr.,(2014) and for the nine months period ended 31.12.14 it has earned net profit of Rs. 71.69 crore on a turnover of Rs. 1279.38 crore. If we annualized latest earnings then EPS stands around Rs. 10.44 and thus its asking price is at a P/E of around 19 and at a P/BV of 4.3+ which looks aggressive. Lower profits for 2013 and 2014 fiscal is attributed to rising prices of fuel as well as natural calamities in the area of its operations.
However, considering its track record and the prospects ahead with sliding fuel prices, it appears promising investment option.
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at own risk. Author has no plans to invest in this offer.
Review By Dilip Davda on April 7, 2015
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on the information published here. My reviews do not cover GMP market and operators game plans. Any reader taking decisions based on any information published here does so entirely at their own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.
About Dilip Davda
Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.
Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.
(Dilip Davda -SEBI registered Research Analyst-Mumbai,
Registration no. INH000003127 (Perpetual)
Email id: dilip_davda@rediffmail.com ).
The initial public offer (IPO) of VRL Logistics Ltd offers an early investment opportunity in VRL Logistics Ltd. A stock market investor can buy VRL Logistics IPO shares by applying in IPO before VRL Logistics Ltd shares get listed at the stock exchanges. An investor could invest in VRL Logistics IPO for short term listing gain or a long term.
Read the VRL Logistics IPO recommendations by the leading analyst and leading stock brokers.
VRL Logistics IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the VRL Logistics IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.
Our recommendation for VRL Logistics IPO is to subscribe for long term.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe for long term to the VRL Logistics IPO.
The VRL Logistics IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit VRL Logistics IPO allotment status to check.
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