VRL Logistics Shifts Gears for Sustainable Growth

Ashwin Thakker

16 Aug 2025 — 2 min read

FY'26 volume outlook: Expected to be flat year-on-year, with 7%-8% growth projected for FY'27.
Realization: Stable at approximately Rs. 7,800 per ton throughout FY'26.
EBITDA Margin: Projected at 19% in Q2 FY'26, normalizing to 18% from Q3 FY'26 onwards.
Capital Expenditure (CAPEX): Vehicle CAPEX currently restrained, aligned with tonnage recovery; Rs. 20-25 crores investment in new transshipment hubs underway.

VRL Logistics, a resilient player in the Indian logistics sector, delivered robust Q1 FY'26 EBITDA margins of 21%. Despite a temporary volume decline due to strategic price rationalization, the company anticipates a strong recovery driven by festive demand and operational efficiencies. Management outlines a clear path for future growth and sustained profitability.

Strategic Volume Recovery and Pricing Outlook

VRL Logistics experienced a 12% year-on-year volume decline in Q1 FY'26, attributed to a deliberate strategy of exiting low-margin contracts for sustainable profitability. Management views this dip as temporary, projecting an 8%-9% year-on-year decline in Q2. Volumes are expected to normalize from Q3 due to festive demand and favorable monsoons, resulting in flat full-year FY'26 volumes. A robust 7%-8% growth is forecasted for FY'27. The company will maintain its realization rate at approximately Rs. 7,800 per ton for the year, with no further price increases planned unless significant cost fluctuations occur.

"volumes declined by around 12% year-on-year basis. However, we view this decline as temporary, and we have already initiated multiple steps to regain momentum without compromising profitability."

Margin Outlook and Strategic Investments

VRL Logistics achieved a robust 21% EBITDA margin in Q1 FY'26. This margin is projected to normalize to 19% in Q2 and 18% from Q3 onwards, primarily due to internal employee salary increments impacting costs by 2%-3% of revenue. Capital expenditure in Q1 was Rs. 15 crores, with vehicle CAPEX currently restrained due to sufficient capacity. Future vehicle investments will align with tonnage stabilization, while strategic investments of Rs. 20-25 crores are underway for new transshipment hubs in Kerala, with other locations under long-term consideration. Branch expansion will also accelerate once freight rate stability is achieved, supporting future growth.

"for the quarter two, the EBITDA margin, we are expecting the impact will be around 2%; whereas in quarter three onwards, the impact will be around 3%. That is what the expectation is."

VRL Logistics demonstrates a clear strategic pivot towards sustainable profitability, even if it means temporary volume rationalization. With a focused approach on cost control, technology integration, and selective expansion, the company is well-positioned to capitalize on India's evolving logistics landscape. Expect gradual volume recovery through FY'26, culminating in solid growth and stable margins in FY'27.

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