Subscribe to VRL Logistics IPO: Ajcon Global

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For the year ended Dec. 31, 2014, around 75.95% of VRL logistics’ total revenue came from goods transportation, which has been its primary business, about 19.5% came from bus operations, and the rest from the car services operated by VRL. Net Sales grew at CAGR of 18% during FY09-FY14 to Rs 1494 cr. The company has managed to reduce its Debt-Equity ratio from the highs of 7.64x in FY06 to 1.69x in FY14, led by substantial cash generation from operational activities. At the upper band of the issue price, VRL is valued at 19x at 9MFY15 Ann. EPS of Rs. 10.67. With due consideration to factors like a) pan-India surface logistics services provider with an established brand and one of the largest distribution networks in India, b) integrated hub-and-spoke operating model ensuring efficient consignment distribution, c) diversified customer base, d) robust financials with strong Balance Sheet, e) cheaper valuations against immediate peer Transport Corporation of India trading at P/E multiple of 25x at FY15E EPS (note: Business models of Gati and Blue Dart are not exactly the same), we recommend subscribe.