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Reviews and Recommendations of the VRL Logistics IPOICICI Direct cannot recommend BUY / SELL since it is the Book Running Lead manager. It has the Following Review
Priced at FY15E (annualised) PE multiple of 18x on lower band; 19x on higher band. At the IPO price band of | 195-205, the stock is available at a multiple of 18-19x FY15E PE (post dilution).
KR Choksey Analysts Ankush Mahajan and Nirvi Ashar have the following Views,
VRL Logistics at upper band (Rs 205) post equity dilution will trade at EV/ EBITDA 9.0x which we is discounted to peers. Considering cheap valuations and strong foothold in Southern India, we recommend "Subscribe"
Angel Broking analyst Milan Desai has the following recommendation,
The company's net sales have grown at a CAGR of 18.9% over FY2011 to Rs1,494cr in FY2014. The EBITDA margin has been declining (from 18.7% in FY2011 to 13.8% in FY2014) but has recovered well in 9MFY2015 to the level of 17.0%. The net profit has grown at a CAGR of 15.3% over FY2011-FY2014. At the higher end of the price band, the stock is valued at 19.6x its FY2015E annualized earnings which we believe is attractive considering that similar logistic companies like Transport Corp trades at 25.0x its FY2015E earnings. Considering the improving economic outlook, its pan-India presence and resonable valuations, we recommend a Subscribe to the issue at the upper price band.
Asit C Mehta wrote the following on VRL IPO,
VRL is poised to benefit from increasing pan-India logistics business. At the offer price band of Rs 195-205, stock is trading at 19.5x – 20.5x of its annualized FY15E EPS of Rs10.05, which seems lower than its peers and industry average. Hence, we recommend to
SUBSCRIBE the issue
Way2Wealth Analyst Ronak Morjaria wrote on the VRL IPO as follows,
At the offer price bands, the issue is available at P/E of 17.4x –18.3x its 9M-FY15 EPS (annualized) of Rs11.2. We believe the growth prospects for India’s road transport to improve as the government takes steps to increase investment in national highways. The
company’s internal strengths such as large fleet of owned vehicles, wide distribution network & diversified customer base will enable the company to ride this wave of opportunity successfully. Hence we recommend Subscribe to this issue
Quant Equity Research Analyst Raghunandhan N L wrote,
VRL would register revenues CAGR of 19% and earnings CAGR of 16% over FY10-15 (FY15 annualized). On annualized 9MFY15 numbers, the company trades at 18.3x P/E at the upper IPO band (Rs205), which we find is undemanding compared to 25x for TCI (FY15E consensus EPS of Rs11.5). Therefore, we recommend that investors should SUBSCRIBE to the offering from a long-term perspective.
Equitymaster Research Analyst has the following recommendation,
While the company seems to be a strong player in the segment that it operates in, high competition in the business and high debt remain key concerns. Also, at a price band of Rs 195 to Rs 205 per share, it is valued at around 19 to 20 times its annualized earnings of 9MFY15. Even if we assume the net sales to grow at a 5 year average annual growth (CAGR) of 20% (close to average annual growth FY 10-FY 14) and assume a profit margin of 5% (average since FY 10), the expected earnings per share in FY 20 (post dilution) come to around Rs 23 per share, implying a net profit CAGR (FY 15 annualized - FY 20e) of around 17%. In comon, valuations at around 19 to 20 times (of annualized earnings in FY15) do not seem attractive (especially keeping in mind the risks that we have highlighted). We recommend investors to 'AVOID' this IPO at the current juncture.
They also had AVOID Recommendation for Wonderla Holidays IPO - Sanctity of Research ;-)
MicroSec Analyst Ujjala Chaudhary has the following Review,
VRL generates 75% from Transportation, 20% from Bus Operations and 5% from sale of power and air charter business. VRL has come up with an offer for sale cum fresh issue. The IPO comprises of 0.57 cr fresh equity shares and an offer for sale of 1.71cr equity shares. Based on the price band INR 195-205/share the IPO could raise INR 451-468 crore. At the upper band offer price of INR 205, VRL Logistics is valued at 24.46x on a P/E basis VS the average valuation of 34-36x of the listed players. Thus at this price riskreward is favorable for the long term investors. Considering the company's pan-India presence and reasonable valuations we have a positive view of this stock and hence we recommend the investors to SUBSCRIBE to the issue.
Phillip Capital Analyst Vikram Suryavanshi and Deepak Agarwal have the following Review,
At the upper band of Rs 205, the stock is priced at 19.6xFY15 annualized earning and P/BV of 4.2x. The company has healthy margin and return ratios (13% -17% RoCE). Considering leadership position in road transport and growth opportunities, we recommend Subscribe at upper price band.
