Shares of VRL Logistics were hammered out of shape this week with investors getting nervous on promoter's plans to foray into airlines business. The newly listed stock, which made a debut on the stock exchanges in April last year, had a healthy rally till its January-March quarter results were announced on May 23. From then on, there was no looking back. On May 24, the stock was locked at lower circuit, losing 20 percent followed by another 13 percent slump the next day. On May 25, Ashoka Pte sold 9,49,658 shares of VRL Logistics at Rs 263.86 and Goldman Sachs India Fund sold 8,11,642 shares at Rs 264.65. Weak fourth quarter results and company's desire to launch regional airline did not go well with investors in VRL Logistics.
In those two days, the company’s market cap fell to Rs 2513 crore which had risen to Rs 4255 crore in August last year. Surprisingly the bruised stock made a 5 percent jump (May 26) after two days of loss and fell 4 percent at Friday’s closing.
Perhaps, sordid saga of liquor baron Vijay Mallya still haunts investors mind. With a burgeoning debt amounting to around Rs 9000 crore, Mallya burnt his fingers and had to eventually shut operations of Kingfisher Airlines causing headache to investors, banks and government. VRL Logistics, meanwhile, which was listed on bourses with a 40 percent premium from its issue price of Rs 205 per share, was no longer liked at Dalal Street. However, analysts are not so perturbed yet. Sachin Shah, Fund Manager, Emkay Investment Managers says the way its business has been built up by management and delivery has been exceptionally good. According to Shah, its aviation business news has been probably disproportionately blown out but the biggest disappointment has been the Q4 results. "Obviously, the stock valuations did not give you any great margin of safety and therefore in spite of we liking this business and the management we weren’t able to own it because at those valuations margin of safety wasn’t there," he said in an interview to CNBC-TV18.
21/07/16 Nasrin Sultana/Moneycontrol.com
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In those two days, the company’s market cap fell to Rs 2513 crore which had risen to Rs 4255 crore in August last year. Surprisingly the bruised stock made a 5 percent jump (May 26) after two days of loss and fell 4 percent at Friday’s closing.
Perhaps, sordid saga of liquor baron Vijay Mallya still haunts investors mind. With a burgeoning debt amounting to around Rs 9000 crore, Mallya burnt his fingers and had to eventually shut operations of Kingfisher Airlines causing headache to investors, banks and government. VRL Logistics, meanwhile, which was listed on bourses with a 40 percent premium from its issue price of Rs 205 per share, was no longer liked at Dalal Street. However, analysts are not so perturbed yet. Sachin Shah, Fund Manager, Emkay Investment Managers says the way its business has been built up by management and delivery has been exceptionally good. According to Shah, its aviation business news has been probably disproportionately blown out but the biggest disappointment has been the Q4 results. "Obviously, the stock valuations did not give you any great margin of safety and therefore in spite of we liking this business and the management we weren’t able to own it because at those valuations margin of safety wasn’t there," he said in an interview to CNBC-TV18.
21/07/16 Nasrin Sultana/Moneycontrol.com
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