VRL Logistics: Volume Stabilization, Margin Resilience Forecast

Ashwin Thakker

16 Aug 2025 — 1 min read

FY26 Volume Outlook: Expected to be flat year-on-year, with recovery from Q3 FY26 onwards.
FY27 Volume Outlook: Anticipated growth of 7% to 8%.
Revenue Realization: Expected to be maintained at approximately Rs. 7,800 per ton.
EBITDA Margin Outlook: Projected to be around 19% in Q2 FY26, stabilizing at 18% from Q3 FY26 onwards.
Capital Expenditure (CAPEX): Vehicle CAPEX linked to tonnage stabilization; larger facility investments in Kerala (Rs. 20-25 crores) with potential for higher CAPEX in FY27-FY28, possibly starting in FY26. Fleet size to remain stable at ~6,000 vehicles.
Branch Expansion: Future expansion will see a net increase in branches, but at a slower pace until freight rates stabilize.

VRL Logistics Limited’s Q1 FY '26 earnings call reveals a strategic pivot. While Q1 saw a 12% volume decline from exiting low-margin contracts, the company projects volume normalization from Q3 FY26, with 7-8% growth expected in FY27. This move underscores a commitment to sustained profitability, aiming for stable margins around 18-19%. The outlook highlights strategic adjustments, expected volume recovery, and disciplined expansion.

Volume Outlook and Strategic Pricing

VRL Logistics' Q1 FY26 saw a 12% volume decline, a strategic choice to exit low-margin contracts prioritizing profitability. Volume normalization is anticipated from Q3 FY26, driven by festive demand and monsoon. For FY26, volumes are projected flat year-on-year, with 7% to 8% growth expected in FY27. Revenue realization will remain stable at approximately Rs. 7,800 per ton. This disciplined pricing reflects a focus on quality contracts over mere volume gains.

Margin Resilience and Strategic Investments

VRL Logistics achieved a robust 21% EBITDA margin in Q1 FY26. Management anticipates margins adjusting to 19% for Q2 FY26, stabilizing at 18% from Q3 FY26 onwards, mainly due to employee cost increments. Focus remains on rigorous cost controls, like optimized fuel procurement. Capital expenditure for vehicles will align with tonnage stabilization, potentially resuming from Q3/Q4 FY26. Branch expansion will see cautious net increases, pending freight rate stability, supporting long-term network efficiency and profitability.

VRL Logistics is strategically pivoting towards profitable growth. A volume rebound is anticipated from Q3 FY26, targeting 7-8% growth in FY27, with consistent margins (Q2: 19%, Q3+: 18%). Focused on cost efficiency, disciplined CAPEX linked to tonnage stabilization, and cautious network expansion, VRL Logistics aims for sustainable long-term value in the evolving logistics sector.

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