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Motilal Oswal Report
VRL Logistics Ltd. announced a capex plan of Rs 5.6 billion to purchase 1,600 trucks (~25,000 tonne carrying capacity) spread over the next 12-18 months. This capex is essential to:
replace its older fleet that moves out due to the vehicle scraping policy and
capture the pick-up in demand in the less than truck load segment.
VRL Logistics currently has a fleet capacity of ~69,000 tonne and with this capex, there would be a net capacity addition of 20% (adjusted for scrappage of old trucks).
The capex would be funded by internal accruals and debt.
We believe VRL Logistics would be very well placed to capitalise on the growth opportunity after this capacity addition. With strong balance sheet, the company would comfortably manage the capex funding by availing an additional debt of Rs 3-3.5 billion along with internal accruals.
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