VRL Logistics tanks 9% on weak Q4 results

The stock dipped 9% to Rs 305 after the company reported 30% YoY drop in profit at Rs 8.38 cr in Q4.

VRL Logistics dipped 9% to Rs 305 on BSE after the company reported 30% year on year (YoY) drop in consolidated net profit at Rs 8.38 crore for the quarter ended March 2017 (Q4FY17). It had reported profit of Rs 11.93 crore in the same quarter year ago.

Operational revenue during the quarter under review grew 6.5% to Rs 443 crore against Rs 416 crore in the corresponding quarter of previous fiscal year.  Earnings before interest, tax, depreciation and amortization (Ebitda) margin declined to 4.5% in Q4FY17 from 6.7% in Q4FY16.

VRL Logistics’ Q4FY17 results were below estimates primarily due to poor performance in bus transportation. VRL has added 38 buses in FY17, however local competition kept the fill factor around 80% Vs 85% in FY16, analysts at Prabhudas Lilladher said in a note.

Further, higher operating costs primarily diesel up 28% YoY to Rs59.9 and lower availability of bio?diesel vs last year led to weak EBIDTA margin of 2.9% Vs 18.7% YoY. Similarly, due to lull in Goods Transport (GT) business, management decided to offer some discounts in the market place to garner higher volumes which really didn’t work as envisaged, added report.

VRL sounded positive on the Goods & Service Tax (GST) rollout for its GT business as GST implementation would help avoid transit time losses of almost 25% at various check?posts. This would facilitate higher utilisation and turnaround time resulting in increased availability of GT vehicles and hence volumes.

The brokerage firm has however, downgraded the stock to “Accumulate” as the stock has had one issue or the other consistently in the last few quarters impacting the performance and these seems to be coming in without any guidance on these.