This smallcap multibagger stock zoomed over 150% in one year; more upside likely

Shares of VRL Logistics Ltd have delivered around 150 per cent return to its shareholders in the last one year. Its share price has jumped from Rs 174 to Rs 473.5 in the last year, logging around 172 per cent growth.

An amount of Rs 5 lakh invested in this multibagger stock a year ago would have turned to Rs 13.6 lakh today.

The scrip has jumped around 129 per cent since the beginning of this year. With a market capitalisation of more than Rs 4,100 crore, the shares stand higher than the 5 day, 20 day, 50 day, 100 day and 200 day moving averages.

VRL Logistics reported a standalone profit of Rs 49.48 crore for the quarter ended September 2021 as against a profit of Rs 30.88 crore in the year-ago quarter. The company's net sales rose 45 per cent to Rs 636.37 crore during the quarter.

The company said that despite the difficulties faced, the impact on business was lesser than during the first wave witnessed last year, as supply chains were evolved enough to cope with localised and staggered lockdowns.

Brokerage house Motilal Oswal believes that strong tailwinds for VRL would drive consistent growth in volumes and earnings over the next few years. The company would benefit from the uptick in economic activity, the general price hikes taken post 1QFY22, and easing fuel prices (on account of tax cuts).

With demand pickup and branch additions in untapped regions, Motilal Oswal expects VRL to clock 19 per cent revenue CAGR over FY21–24E. With robust volumes and cost efficiency measures, VRL would be able to maintain its EBITDA margin profile at 14–15 per cent over the next two years.

"We expect the company to clock a revenue/EBITDA/PAT CAGR of ~19 per cent/19 per cent/45 per cent over FY21–24E. The stock trades at 30x FY24 EPS. We maintain our Buy rating, with a revised target price of Rs 540/share (35x FY24E EPS)," it added.

In a separate report, the brokerage house highlighted that the logistics sector is set to move towards formalisation and there would be strong growth opportunities for some of the established players in this space. With a robust growth outlook, it expects a strong upside in the stock from current levels.

According to MarketsMojo, the company has declared positive results for the last four consecutive quarters and has a strong ability to service debt as it has a low Debt to EBITDA ratio of 0.79 times.

The technical trend has improved from 'Mildly Bullish' on June 3, 2021, and has generated 77.86 per cent returns since then. The stock is technically in a 'Bullish' range. Multiple factors for the stock are 'Bullish' like MACD, Bollinger Band, KST, DOW and OBV.