VRL Logistics Limited (VRLLOG) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to VRL Logistics Q1 FY '27 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Mukesh Saraf from Avendus Spark. Thank you, and over to you, sir.

Thank you. Good morning, everyone. Mukesh Saraf here from Avendus Spark. Appreciate everybody logging into this 1Q FY '27 earnings call of VRL Logistics. From the management team, I'm pleased to host Mr. Sunil Nalavadi Sunil, CFO of Logistics. I'll now hand over the call to Mr. Nalavadi for his opening remarks, after which we will take the Q&A. Over to you, sir.

Thank you, Mr. Mukesh. Good morning to all participants. I'm Sunil Nalavadi, CFO of Logistics. I welcome all of you once again for the earnings conference call for quarter 1 of financial year '27. I would like to inform you that we have completed 50 years of service in the logistics industry. Our promoter, Dr. Vijay, started this company in the year 1976, [indiscernible] [Audio Gap] [00:01:33] to [00:09:05]

[Operator Instructions] The first question is from the line of Alok Deora from Motilal.

Congratulations on really good numbers. Sir, I just had a couple of questions. First is how much price hike we have taken during the quarter? I mean, the blended realization comes to 9%. But have you taken a proper hike, or is it more tactical due to the short-term nature, due to shortage or diesel cost increase? Or is it like we have taken a general price increase, what it is called in the market? Have we taken that price increase, which will sustain, or is it more of a short-term in nature? First question is that. And second, on the volume, I mean, despite the low-margin customers being out of the system, volume growth trajectory has been very strong at around 9%. So just any thoughts on that, how that could shape up going ahead? Was it because of a low base or whether this 9% to 10% should be the new normal?

First thing on the freight rates, I want to give clarity that Q1'26 [indiscernible] and in Q4 [Audio Gap]

So what you are basically saying is that the INR 8,500 per tonne should continue. So the growth rate of 9% will go down in terms of growth rate by the end of this year to more like 4%, 5%.

[Audio Gap]

No, no. I mean INR 8,100, fourth quarter INR 8,100, we have taken around 4% to 5%, right?

The fuel price is [indiscernible], and we are looking for further improvement in this INR 8,546. So on a full-year basis, there is no fuel rate change in the next quarter; there is no decline, then INR 8,546 [indiscernible] [Audio Gap]

So on a full-year basis, what should be the sustainable volume because we'll go in the second half with a slightly higher base. So the full-year number should be more like 6%, 7% only?

On a full-year basis, the expectation will be around 8%.

Just one last question, sir. What's the CapEx number estimated, because now we are also announcing a buyback? So any sense on the CapEx because we will be requiring funds for that as well?

Yes. I want to clarify the requirement currently; we are doing the cash flow around INR 120 crores to INR 130 crores in the quarter. [Audio Gap]

[Operator Instructions] The next question is from the line of Krupashankar NJ of Avendus Spark.

Congrats on great results. Just wanted to double on the volume growth. Now you did mention that some of your customers have come back in this quarter. Can you give us some sense around qualitative comments on what the reason is they came back? And if you can further break up the volume growth [indiscernible]

[Audio Gap]

Cost of the Geog, there is an increase because of [indiscernible] some color on that on a sequential basis, we have not seen any change with respect to the average distance... 2 to 3 overall..

[Audio Gap]

One question on the margin side of things. We've seen that Karnataka has implemented the minimum wage. And so was there any impact in the first quarter to that degree? And is there any impact on operations in Karnataka? Have you seen any impact in this quarter?

[Audio Gap]

With respect to inflation increases in other aspects, fuel cost is one big impact. Any other cost items where there is a one-off element or something which you witnessed in the first quarter?

[Audio Gap]

The next question is from the line of Jainam Shah from Equirus Securities.

The question is more on the long-term basis. What we see in VRL Logistics is that earlier, let's say, 1 or 2 years back, we were more a volume-led company rather than a profit-led or, let's say, value-led company. Eventually, we have changed our stance, and we have started increasing our prices. We have started charging for some services, which we were not charging. We have started passing on all the cost increases, and that has impacted our volume. But now, even at these higher prices, our volumes are largely back. The question would be, let's say, for the next 5 to 7 years' timeline, how do we see our strategy? Like, will it be value-led, or will we be balancing both of these, or will our focus be on profitability? And probably at what juncture do you believe that this price hike might stop, and we will not be able to, let's say, grow the volume because of the price hikes? Let's say our strategy is this: what kind of margins will we eventually target in this particular environment because our assessment was that this quarter might be impacted because of the higher fuel cost. And of course, the bulk procurement has already increased before the retail pricing, despite the numbers really. So how do we see the next 5 years panning out in terms of pricing and volume? And what eventually led to the increase in confidence regarding the price increase, which is eventually leading to this kind of consistent profitability growth?

So basically, the freight rates are, and with the exercise we completed in the last year itself, whatever the real improvement in the current quarter is mainly on account of an increase in fuel rate. So because of that, we pass it on to the customer and [indiscernible] [Audio Gap]