VRL Logistics Limited

VRL_LogisticsThis is a company which I did not study but still made good money on and will make more in the next few days (I almost know for sure).

What is the story here?

Three days back promoters announced their plan to start a regional airline. From logistics to airline? Wow. Next day in an interview one of the promoters further stated and I quote:

Either my shareholders are liking or don’t liking I am not bothered. See I have a passion, I have to do lot of things and lot of business. It is nothing to be the somebody’s business to ask.

Oops! Not the perfect statement to make! The stock plummeted from Rs. 400 to a low of Rs. 250. Almost 40% drop! The promoter had also mentioned that Rs. 1,400 Cr. is the total investment out of which Rs. 300 Cr. to Rs. 400 Cr. will be sourced via equity sale from promoter share of VRL Logistics and that the stake sale would take place over the next 3 years or so.

Why I invested and you should too (you still can at current price)?

The promoter had also mentioned that the airline business will be a separate entity run by professionals and that VRL’s balance sheet would not be used for the airline business in any manner. I do not understand why is this such a big problem that the stock falls 40%. I understand that the promoter is selling his stake to start a new company. So what? Just because the promoter was stupid enough to make the above statement, it does not warrant for such a huge fall. More so because the stake sale will be gradual and not immediate.

Hence I suggest a buy on the stock at the current market price of around Rs. 290.

Target?

I suggest to book profits when the stock hits Rs. 350.

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