VRL Logistics IPO grey market premium at 38%

MUMBAI: The demand for the initial public offering of VRL Logistics is slowing picking up. In the grey market, the issue is valued at 38 per cent premium or Rs 78 to the high end of price band, say ET Now sources.

Till 2 p.m.; the issue was subscribed 0.27 times as per the NSE website. The valuations are attractive as compared to listed peers and the issue is likely to sail through comfortably, say marketmen.

The issue ends on April 17, 2015.

VRL specialises in surface logistics and parcel delivery service. It owns and operates the largest fleet of commercial vehicles and has transportation network in 28 States.

The company has issued shares to anchor investors such as ICICI Prudential, DSP Blackrock, Birla Sunlife, L&T MF, Sundaram MF, ADIA and East Spring at higher end of the price band at Rs 205/share.

The proceeds from the IPO will be utilised to purchase of goods transportation vehicles and repayment of certain borrowings.

Brokerages have ??advised investors to ‘Subscribe’ to VRL Logistics IPO.

According to IIFL report, at the upper end of Rs195-205 price range, the stock is valued at 14.7x FY16E EPS of Rs 13.9 whereas peers such as Gati and Transport Corporation of India trade in the range of 18x-25x.

“We note that apart from plain vanilla surface logistics, these peers also provide niche services like express delivery, ecommerce delivery and supply chain management and therefore trade at higher multiples,” the report said.

“Nevertheless, with the improving macroeconomic environment, contribution of freight transportation via road is poised to increase and VRL with its largest fleet size, superior track record, strong brand name, diverse client base, and vast management experience is all set to benefit from the opportunities provide by the sector,” it added.