VRL Logistics IPO – Winner Takes All

  • Date 14th April 2015
  • IPO Price range: Rs. 195-205
  • IPO Period: 15-17th Apr 2015
  • Mid Cap – Rs 1900 cr Mkt Cap
  • Industry – Transportation, Goods and Passengers
  • Advice: BUY, with a 2 year holding period

Summary:

  • The transportation sector is recognized as a leading indicator of the economic cycle of the country. We expect this sector to do well over the next few years.
  • VRL Logistics is one of the larger organized players of this sector. The firm represents several high potential businesses, built over many years by the first and now second generation entrepreneurs.
  • We feel that in this sector the business volumes are critical and the top 2-3 players will dominate, a ‘Winner Tales All’ situation. VRL is well placed to be the winner over the next few years.
  • Management quality appears good. Like the real estate sector, doing business in transportation too involves many legal issues and disputes, the resolution of which may take many years due to our glacial judicial process. We downplay the large number of pending cases involving VRL.
  • VRL appears to be business wise aggressive while financially sound, using PE funding for new ventures, and ensuring positive FCF for 5 of the last 6 years. This is a good combination.
  • The VRL Logistics IPO is rated medium risk, but a BUY, with a 2 year holding period.

VRL Logistics Financials, by JainMatrix Investments

VRL Logistics Financials, by JainMatrix Investments

IPO highlights

  • IPO is open from 15-17th Apr 2015 with Issue Price band: Rs.195-205 per share
  • Shares offered to public: 2.27 crores of Face Value: Rs.10 per share
  • Shares offered as portion of equity post issue: 25%. Post IPO, promoters stake would reduce to 70%, another 25% would be sold in IPO to numerous parties and the rest 5% held by private investors.
  • The amount proposed to be raised: Rs.467 crores (at upper end). The IPO proceed will be used for:
    1. Rs 350 crore – exit by New Silk Route, PE firm and promoters Dr. Vijay and Anand Sankeshwar.
    2. Rs 67 crore on acquisition of new fleet.
    3. Rs 28 crore for repayment of debts and
    4. The rest of about Rs 22 cr. would be spent for corporate purposes.
  • These objects appear to be reasonable – for investor exit and to grow the core business of VRL.

Download this Research Report

JainMatrix Investments has created a 4 page Research report of VRL Logistics IPO. This captures our perspective of VRL Logistics IPO in the current economic context, including  financial review and Cash Flow analysis, SWOT review  with Risks and Overall Expert Opinion.

JainMatrix Investments_VRL IPO_Apr2015

This report is available for your usage. Click link above to download the PDF format report.

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Disclosures and Disclaimer

This document has been prepared by JainMatrix Investments Bangalore (JM), and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JM. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JM has not independently verified the accuracy or completeness of the same. Neither JM nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from an independent expert/advisor. JM has been publishing equity research reports since Nov 2012. JM and its promoters/ employees have no financial interest in VRL Logistics Ltd or their group companies, and no known material conflict of interest as on date of publication of this report. Any questions should be directed to the director of JainMatrix Investments at punit.jain@jainmatrix.com

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