Dolat Capital recommended accumulate rating on VRL Logistics with a target price of Rs 175 in its research report dated June 23, 2020.
Dolat Capital's research report on VRL Logistics
VRL Logistics (VRLL) reported a 3% fall in 4Q and muted topline in FY20, as the difficult macroeconomic conditions put pressure on both goods and bus segments. Management highlighted the following: (1) No major capex for FY21. Added 229 GT vehicles in Q4 (2) Price hikes taken to offset volume fall. (3) IND-AS and COVID-19 impacted the operating profit and bottom-line. (4) Focus on client addition (5) Cost control measures taken like pay cuts (6) Improvement in availability of workers and drivers (7) Asked for rent waiver for April month.
Outlook
We expect losses in FY21E due to loss of revenue and relatively higher fix cost. Expect recovery from H2FY21E with improvement in business segments. Accordingly, we lower our fair value target to Rs 175 at 16x FY21 PE and maintain Accumulate rating.
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