Multibagger stock may rally more as brokerages raise target price
Premium- Brokerages have buy rating on the multibagger stock that has rallied more than 139% in a year's period
VRL Logistics’ (VRL) overall performance was in-line with street's expectations in Q4FY22. Passenger transport revenue also witnessed a strong rebound with 10.7% year-on-year (YoY) growth in the fourth quarter, thereby, maintaining positive EBITDA.
Brokerage firm ICICI Securities has maintained Buy rating on the VRL Logistics shares with a revised target price of ₹770 per share ( ₹600 earlier). The multibagger stock has rallied more than 139% in a year's period, whereas, it is up over 39% in 2022 (YTD) so far.
Reduction in overall operating costs and strong volume growth in good transportation (GT) segment allowed VRL to further improve on gross margin at 35%. YoY volume growth in GT segment still remains strong in mid-teens. The company has guided for 20-25% increase in tonnage in FY23.
VRL Logistics turned in a strong Q4FY22 and it reflects a broad-based recovery across sectors, and the potential runaway benefits of an asset-owned transportation model during an upcycle, said another brokerage Edelweiss in a note.
Higher utilisation in the goods transportation segment delivered high operating leverage gains with EBITDA margin sustaining at ~19%—clearly also hinting at high efficiencies.
“After a bumpy FY22, we argue FY23 should mark an acceleration from unorganised trucking to organised. And VRL’s planned fleet addition should further unleash its full potential in FY23/24. All in all, we are raising FY23/24E PAT by 5%/2% and target one-year forward PE to 22x," the note stated. Edelweiss has retained buy tag on the stock and raised target price to ₹750 (up from ₹600).
After its firm foothold in South, VRL is now eyeing expansion into the North, NorthEastern and Western regions. The company plans to add about 100 branches in the untapped regions during FY23, after adding 91 in FY22.
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