VRL Logistics shares crashed 20 per cent on Tuesday, following its promoters’ decision to start a regional airline in their personal capacity.

VRL Logistics promoters – Vijay Sankeshwar and Anand Sankeshwar- on Monday said they want to incorporate a separate company to start a regional airline and they plan to sell a minority stake in VRL Logistics.

“The board members should note that we may seek to dilute a portion of our present holding in VRL Logistics in order to provide us with liquidity to enable our investment for the aviation venture,” the promoters said in the filing to BSE.

Fund manager Sandip Sabharwal said, “VRL Logistics latest fancied stock to bite the dust. Promoters announce foray into Aviation with “small” amount of Rs 1400 crore.”
The Hubli-based company also reported a 32 per cent fall in its net profit in the March quarter, which hit sentiments, analysts said.

VRL Logistics Q3 profit fell to Rs 13.21 on account of higher operating expenses and employee benefits. Its revenue increased 5 per cent to Rs 416 crore in Q4.

VRL Logistics had reported a net profit of Rs 19.36 crore on sales of Rs 398 crore in the corresponding quarter of last fiscal.

For FY16, VRL Logistics reported a net profit of Rs 102 crore or earnings per share of Rs 11.26. VRL Logistics shares are valued at 35 times trailing earnings per share.

G Chokkalingam of Equinomics Research & Advisory, told NDTV Profit that VRL Logistics’ valuations are not sustainable.

VRL Logistics, which came out with its IPO in April 2015, had a spectacular listing last year. Its shares gained over 50 per cent (against issue price of Rs 205) on the day of listing. VRL Logistics made a 52-week high of Rs 479 in September last year.

As of 11 a.m., VRL Logistics shares were locked in lower circuit at Rs 314.75 on the National Stock Exchange.