Subscribe to VRL IPO with short-medium term view: Arihant

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VRL is one of the leading pan-India surface logistics and parcel delivery service providers. The company owns and operates the largest fleet of commercial vehicles in the private sector in India (Source: Limca Book of Records, 2013, data as of May 2012). It provides general parcel and priority parcel delivery (less than truckload services, “LTL”), courier and full-truckload (“FTL”) services through their widespread transportation network in 28 States and four Union Territories across India. Their operational infrastructure for the goods transportation business as of December 31, 2014 comprised 624 branches (comprising 604 leased branches and 20 owned branches) and 346 agencies across India, and of such 624 branches, 48 (41 leased branches and seven owned branches) served as strategic transshipment hubs for their operations.

Valuations
"The company is bringing the issue at price band of Rs 195-205 at price/earnings (PE) ratio of 19x the upper price band of Rs 205 and 18x the lower price band of Rs 195 on FY2015 annualised earnings. Valuations in our view are lower than its peer"

Recommendation
"We recommend investors to SUBSCRIBE for the IPO with a short to medium term view", says Arihant capital markets research report.