VRL Logistics: Q2 Results Beat! ICICI Securities Says BUY with New Target – Top Pick Alert!

VRL Logistics' Q2FY26 financial results showed a slight beat in EBITDA compared to market expectations. The company achieved a significant 12.8% year-on-year increase in realization per tonne, reaching INR 7,166, and improved EBITDA per tonne to INR 1,548. However, EBITDA margins saw a sequential decline to 19% primarily due to increased employee costs from a recent wage hike. Volume experienced a 10.7% year-on-year contraction, attributed to discontinuing less profitable business lines and the impact of GST reductions.

VRL Logistics invested INR 430 million in capital expenditure during the first half of FY26 and plans to invest a substantial INR 1.6 billion in the second half. The company also completed a 1:1 bonus share issuance in August 2025.

The management is optimistic, guiding for a 4-5% quarter-on-quarter volume increase in Q3FY26 and a 6-7% growth in Q4FY26. They expect EBITDA margins to remain stable at current levels.

Impact: ICICI Securities, based on VRL's H1 performance, has adjusted its earnings per share (EPS) estimates for FY26E and FY27E downwards slightly. Despite this, they maintain a 'BUY' recommendation for VRL Logistics, setting a revised target price of INR 350 (adjusted for the bonus issue, previously INR 355) based on an unchanged multiple of 27 times FY27E EPS. The brokerage firm highlights VRL Logistics as their preferred investment among surface logistics providers, underscoring confidence in its future prospects and market position.

Rating: 7/10

Difficult Terms: EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization. It's a measure of a company's operating performance. Te (Tonne): Refers to metric tons, a unit of weight commonly used in logistics to measure cargo. YoY: Year-over-year, comparing a period with the same period in the previous year. QoQ: Quarter-over-quarter, comparing a period with the previous quarter. Capex: Capital Expenditure, money spent by a company to acquire or upgrade physical assets like property, buildings, or equipment. EPS: Earnings Per Share, the portion of a company's profit allocated to each outstanding share of common stock. TP: Target Price, the price at which a brokerage firm or analyst expects a stock to trade in the future. Multiple: In valuation, a multiple is a ratio used to compare a company's value to a financial metric (e.g., 27x FY27E EPS means the stock price is 27 times its estimated earnings for FY27).