How is VRL Logistics Positioned for Growth After MOSL’s Buy Call?
About VRL Logistics: VRL Logistics Limited is one of India’s largest surface logistics and parcel delivery companies, with a diversified business model spanning freight transportation, passenger bus operations, and other logistics services. Established in 1976, the company has built a strong pan-India presence with a large fleet of trucks and buses. It is especially known for its hub-and-spoke distribution model and asset-heavy approach, giving it strong operational control and reliability. Being a pioneer in the organized logistics sector, VRL Logistics has continued to leverage technology and infrastructure to maintain its competitive edge in a highly fragmented industry.
Why MOSL Prefers VRL Logistics?
VRL Logistics has consistently focused on profit-led growth rather than mere expansion of volume. This approach ensures that even in a competitive market, the company prioritizes financial sustainability. The implementation of GST rate cuts is expected to improve affordability and boost freight movement in the coming quarters.
According to MOSL’s projections, volumes will remain largely flat in FY26, but a growth of 7–8% is anticipated in FY27. This suggests that the near-term outlook may be cautious, but the medium-term trajectory looks promising as demand revives with economic activity.
✔ Revenue CAGR (FY25–27): ~6%
✔ EBITDA CAGR (FY25–27): ~10%
✔ PAT CAGR (FY25–27): ~19%
Impact of Salary Hike and Cost Factors
While the company has been efficient in cost management, the upcoming salary hikes effective August 2025 could reduce profitability by 2–3% of revenue. However, MOSL notes that VRL’s strong operating leverage and better utilization of its existing infrastructure will help offset the impact. Importantly, fewer new branch openings in FY26 also point to a cautious expansion strategy, which should protect margins in the near term.
Strategic Importance of VRL in the Logistics Sector
India’s logistics industry is undergoing structural reforms with digital adoption, GST-led consolidation, and increased demand from e-commerce. VRL Logistics stands out due to its strong asset base and reputation for reliable service delivery. Unlike many smaller players, VRL has the scale to negotiate better freight rates and optimize operational costs.
The company’s strategy of focusing on profitable growth ensures that it does not overextend in uncertain demand cycles. This positions VRL as a stable long-term player in the logistics sector, which is crucial for both institutional and retail investors evaluating the stock.
Financial Performance Outlook
MOSL estimates show that despite short-term moderation in volume, VRL Logistics will continue to deliver healthy financial results between FY25 and FY27. Revenue is projected to grow at a CAGR of around 6%, while EBITDA is expected to grow at a faster 10% CAGR. The most impressive metric remains Profit After Tax (PAT), which is expected to rise at 19% CAGR, highlighting efficient cost management and operational leverage.
This suggests that VRL is not just growing in scale but also improving profitability, making it an attractive pick for investors looking for consistency in returns.
• Revenue CAGR: 6%
• EBITDA CAGR: 10%
• PAT CAGR: 19%
• Volume Growth: 7–8% expected in FY27
Investor Takeaway
VRL Logistics offers a unique combination of stability and growth in the logistics space. While the near-term may see muted expansion due to limited branch additions and cost pressure from salary hikes, the medium-term outlook remains strong with improving profitability. MOSL’s Buy rating with a target of ₹350 reflects confidence in VRL’s ability to balance growth with profitability.
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SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
