VRLLOG - VRL Logistics Limited Share Price

In the earnings call held on February 6, 2026, management of VRL Logistics provided an optimistic outlook for the company and the logistics sector in general. Total income for Q3 FY26 was recorded at INR 831 crores, showing a 3% sequential growth, while the tonnage improved by crossing 10,900 tons daily during the quarter, denoting a recovery in demand. The management anticipates a gradual uptick in volumes, with an expected Q4 growth of approximately 3-4% sequentially and an overall annual growth projection of 10-11% in tonnage for FY27.

Management revealed that EBITDA margins stood at around 20.9%, supported by increased realizations and strict cost control measures. The profit after tax (PAT) for the quarter reached INR 65 crores, reflecting a 30% sequential increase. Moving forward, the company has ordered 500 new commercial vehicles to enhance fleet efficiency, with 100 already delivered in January 2026. The realization per tonne has increased to INR 8,117, marking a 10% year-on-year increase.

For FY27, VRL expects to maintain its EBITDA margins around 20.5% while projecting revenues of approximately INR 3,600 crores. They plan a total capital expenditure of INR 350 crores, with significant allocation towards expanding infrastructure and fleet. Management's focus will remain on profitable volume growth, efficient cost management, and exploration of new geographic markets, including opening more company-owned branches and engaging franchisee models for network expansion. Overall, management exhibits a proactive stance aimed at consolidating market presence and operational efficiency amid a recovering logistics landscape.

1. Question: My first question would be on the volume growth side. So right now, we see that the base has caught up, and the volume decline you have seen in this quarter should most likely be the last of it. Just wanted to get a sense of your expectations on volume growth going ahead and the steps towards achieving that growth?

   Answer: We expect around 3% to 4% sequential growth in tonnage for Q4. As of January, we've already delivered about 345,000 tons. This indicates a strong start; we're also focused on branch openings and aggressive marketing to reclaim lost customers, which supports our growth expectations.

2. Question: Any targets with respect to branch addition in the next year? What would be your strategy over here?

   Answer: Alongside opening new company-owned branches, we plan to appoint franchisees or agents in new and existing geographies. This will help us tap into local expertise, enhancing our network's efficiency and contributing to increased volumes.

3. Question: You mentioned fleet addition"”500 CVs to meet incremental demand. Given that 20% of your fleet is already depreciated, will this new fleet be adequate for your growth expectations?

   Answer: Yes, we believe adding 500 vehicles will suffice to meet our expected 10% volume growth. Out of these, 100 vehicles were already delivered in January, aligning capacity with our ambitious tonnage plans.

4. Question: Sir, regarding realization, we have seen a 10% gain despite earlier price hikes being factored in. How should we see this going forward?

   Answer: The realization increase is attributed to our focus on higher-margin operations and discontinuing low-margin contracts. While we may see a moderate realization increase, typically around 1% to 2% quarterly, that should be sustainable given our strategy.

5. Question: What are your expectations for tonnage growth in the fourth quarter and next year?

   Answer: We anticipate around 4% growth in tonnage for Q4, with expectations of 10% to 11% growth in fiscal year '27, driven by our enhanced marketing initiatives and operational changes.

6. Question: Can you elaborate on the capex for next year and the overall expansion plans?

   Answer: We plan a capex of approximately INR350 crores for FY '27. This will cover the addition of 500 commercial vehicles and expansion efforts in strategic locations, focusing primarily on major branches rather than hubs.

7. Question: Regarding employee costs, how do you plan to manage this in relation to maintaining your EBITDA margins?

   Answer: We expect stability in employee costs due to fixed nature. While there will be incremental costs, efficiency and revenue growth will help keep the percentage of these costs to revenue lower, aiding us in maintaining around 20% EBITDA margins moving forward.

8. Question: What volume growth are you seeing from new versus existing customers?

   Answer: In Q3, about 10% of our tonnage growth came from new customers, while we faced an 8% attrition rate from customers exiting, representing a year-over-year decline. However, we have experienced a marginal growth from existing customers, indicating a balanced mix in our growth strategy.

9. Question: Do you see any potential for price hikes given current demand dynamics?

   Answer: At present, we are focused solely on sustaining volume growth rather than pursuing additional price increases, maintaining our current realization levels unless there is a significant cost structure change.

10. Question: What is your take on larger vehicle utilization? Are you moving to smaller tonnage trucks?

    Answer: We find that 20-ton trucks are currently more efficient than larger vehicles, given size limitations imposed on larger trucks. We continue to optimize our fleet based on payload efficiency, focusing on what best serves operational needs.