VRL Logistics Limited Q3 FY26 Earnings Call Summary

Summary

VRL Logistics Limited - Q3 FY26 Earnings Call Summary Friday, February 06, 2026 11:00 AM

Event Participants

Executives 1 Sunil Nalavadi (CFO)

Analysts 4 Alok Deora, Ankita Shah, Anshul (Emkay Global), Disha Giria, Krupashankar NJ

Financials & KPIs

Geographic & Segment Commentary

• Goods Transport (Core Segment): Daily tonnage exceeded 10,900 tons as the company recovers from strategic contract restructuring. Management is targeting a shift toward underpenetrated geographies, particularly in the North and Northeast. Strategic focus remains on product-based marketing rather than customer-type, with textiles contributing 16-17% of total tonnage.
• Agency/Franchisee Network: Currently consists of 120-130 agencies contributing 9-10% of total tonnage. Management plans to aggressively expand this network to enter newer geographies without the fixed costs of company-owned branches. New agents are incentivized via tonnage-based commissions while adhering to centralized digital rate cards.

Company-Specific & Strategic Commentary

• Fleet Modernization: Placed an order for 500 new HCVs (20-ton capacity) to be delivered by Dec-2026. Management prefers 20-tonners over 28-tonners due to higher payload efficiency within the same 32-foot vehicle dimensions and better return-load economics.
• Strategic Capex: Allocated ₹50 crores this quarter toward purchasing land for strategic branch locations. The intent is to own major branch properties to mitigate rising rental costs and secure operational tenure in high-demand pockets.
• Cost Management: Successfully offset an increase in employee costs (from 16.6% to 18.1% of income) through fuel efficiencies. The company’s on-roll driver model is maintained as a competitive advantage despite industry-wide driver shortages.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Volume & Strategy

• Question: What is the strategy for achieving 10% volume growth? (Krupashankar NJ)
• Answer: Focus is on appointing franchisees/agents in newer geographies and re-approaching lost customers. January 2026 tonnage of 3.45 lakh tons provides a strong base for 4% QoQ growth in Q4 (Sunil Nalavadi).

Fleet Efficiency

• Question: Why focus on 20-ton trucks when 28-tonners carry more? (Krupashankar NJ)
• Answer: Due to government weight regulations, both 20-ton and 28-ton trucks share a 32-foot body size. 20-tonners are more payload-efficient and easier to fill for return loads compared to 28-tonners (Sunil Nalavadi).

Margins & Costs

• Question: How will you maintain 20% EBITDA margins with rising employee and toll costs? (Anshul)
• Answer: 35-40% of costs (Rent, Employee, Insurance) are fixed. Revenue growth will provide operating leverage. Additionally, increasing captive fuel pumps and bulk refinery sourcing (40% of total) will lower variable costs (Sunil Nalavadi).

Realization Outlook

• Question: Can we expect more realization gains from price hikes? (Disha Giria)
• Answer: No further major hikes planned. Gains of 10% YoY were from last year’s hikes and 5-6% from exiting low-margin contracts. Future revenue growth will be volume-led (Sunil Nalavadi).

Key Takeaway

VRL Logistics reported a stable Q3 FY26 with a notable EBITDA margin expansion to 20.9%, successfully neutralizing higher employee costs through fuel procurement efficiencies and a strategic exit from low-margin contracts. While YoY tonnage declined by 9%, sequential growth of 3% and a strong January performance (3.45 lakh tons) signal a volume recovery. The company is pivoting toward a hybrid expansion model, utilizing both owned branches and a growing franchisee network to target 10-11% tonnage growth in FY27. Strategic capex remains high at ₹350 crores for FY27, split between land acquisition for branches and the addition of 500 higher-efficiency 20-ton HCVs. Management maintains a confident outlook, guiding for ₹3,600 crores in revenue and sustained 20% EBITDA margins for the next fiscal year, assuming stable macro conditions and successful volume scaling.