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ICICI Securities Report
VRL Logistics Ltd. has reported better-than-expected Q1 FY21 earnings.
Goods transport has reported better than expected topline with approximately 5% QoQ price increase; full impact of diesel price hikes will be felt in Q2 FY21.
What impressed us is cost control. Despite 70% YoY decline in revenues, the company could maintain gross margins of 22% (against 35% YoY) – this is impressive because of the asset-heavy model VRL Logistics operates.
Employee costs have also been controlled, down 28% YoY. The current environment is conducive for VRL Logistics to roll-back some of the measures instituted around demonetisation i.e getting significant part of drivers and Hamaali workforce in the payroll.
Net debt remains under control; and the stress in leveraged/unorganised segment remains the key competitive advantage for VRL Logistics.
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