Company Update: VRL Logistics Ltd - BUY - TP Rs.375 - Kotak

VRL has reported weak numbers for FY17, due to factors like weak business environment, demonetisation in Q3FY17, increased employee cost and Kaveri river water issue in southern India. However, going forward, we expect things to improve for the company on the back of 1) Government initiatives to improve road infra; 2) GST Act and Motor vehicle Act; 3) Effective management of fuel cost; 4) Effective internal control systems; 5) a strong Management team and 6) Healthy GDP growth. We estimate earnings CAGR of 39% over FY17 to FY19E with improvement in EBIDTA margins and return ratios of the company. We value the stock at 24x FY19 earnings and Maintain BUY with an increased TP of Rs 375 (from Rs 340)

Source : Equity Bulls

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