First-Ever 1:1 Bonus After Highest-Ever Dividend: Small-Cap Surprises Despite Zero 1-Year Return — Here’s What’s Fueling Its Efficiency
Low-margin contracts were discontinued, which led to a decline in tonnage but contributed to higher EBITDA and improved EBITDA margins for the quarter.
Indian benchmark indices were trading in the red during the afternoon session on July 4, 2025, with the Nifty slipping below the 25,500 mark, while the Sensex managed to hold above the 83,000 level. The broader markets mirrored this trend, as the Nifty Midcap and Smallcap indices declined by 0.31 per cent and 0.22 per cent, respectively.
Amid continued profit booking on Dalal Street, shares of VRL Logistics were in the spotlight following the company’s announcement of its first-ever bonus issue. The board approved the issuance of bonus shares in the ratio of 1:1—i.e., one new fully paid-up equity share of Rs 10 each for every existing fully paid-up equity share of Rs 10 each. This bonus will be issued to eligible shareholders as of the record date by capitalizing the company’s free reserves and accumulated surplus. The estimated date for crediting or dispatching these bonus shares is on or before September 2, 2025.
In addition, considering the company’s improved margins and robust cash flows, the Board of Directors has recommended a final dividend of Rs 10 per share for FY25, subject to shareholder approval in the upcoming board meeting. With this, the total dividend for the year rises to Rs 15 per share, marking the highest-ever dividend declared by the company.
Strong operational cash flows have enabled VRL Logistics to maintain an optimal debt-to-equity ratio of 0.4x, with total net debt standing at around Rs 396 crore as of March 31, 2025. The company has also shown a significant improvement in return ratios. Return on Capital Employed (ROCE), including lease liabilities, rose from 10 per cent to 14 per cent, while Return on Equity (ROE) doubled from 9 per cent to 18 per cent.
During the company’s post-Quarterly Results conference call, the management highlighted its strategic review of contracts in Q4FY25. Building on the freight hike implemented in Q3FY25, the company re-evaluated most business transactions to assess their margin contribution and impact on overall tonnage. Low-margin contracts were discontinued, which led to a decline in tonnage but contributed to higher EBITDA and improved EBITDA margins for the quarter.
Over the last five years, VRL Logistics has delivered multibagger returns of 269 per cent. In the past three months alone, the stock has surged by 20.70 per cent. However, on a one-year basis, the stock has delivered virtually flat returns (Zero Returns).
Disclaimer: The article is for informational purposes only and not investment advice.