Buy TCI Express Ltd For Target Rs.1950 - ICICI Direct
Follow us Now on Telegram ! Get daily 10 - 12 important updates on Business, Finance and Investment. Join our Telegram Channel
https://t.me/InvestmentGuruIndiacom
Download Telegram App before Joining the Channel
Focus on pan-India presence, newer service offerings
About the stock: TCI Express is a leading asset light B2B (95% of revenues) express logistics company with 28 sorting centres, 800+ owned pan-India centres covering 40000 pick-up and delivery points.
* SME and corporate clients comprise 50:50 of overall revenues
* Total 55% of revenues from sectors like auto ancillary, pharma, engineering
Q2FY22 Results: On-track commissioning of sorting centres, results in line.
* Revenues grew 28% YoY to | 273 crore
* EBITDA grew 39% YoY to | 45 crore with margins at 16.6% (vs. 15.3% in Q2FY21) due to lower higher utilisation and better cost control measures
* PAT grew 45% to | 34 crore due to strong operating performance
What should investors do? Building pan-India owned branches and sorting centres in every major city supported by IT enabled transportation infrastructure is expected to build a strong entry barrier in the B2B division.
* We remain positive on the stock and maintain our BUY recommendation
Target Price & Valuation: We value the stock at | 1950 i.e. 37x P/E on FY23E EPS
Key triggers for future price performance: Newer asset light B2B offerings from TCI Express such as Rail express, Pharma Cold Chain and C2C express are expected to contribute 25% of the topline, from the current 15%. These businesses are expected to drive the consolidated EBITDA margins above 20%+ levels.
* Automation of sorting centres (Gurgaon and Pune) is expected to halve the laden time in moving goods in and out of sorting centres (current 15 hours)
* Newer offerings expected to post EBITDA margins in 22-25% range in medium to long term
* Asset light business model, with projected 25%+ RoIC
Alternate Stock Idea: Apart from TCI Express, we remain positive on BlueDart
* BlueDart, with its premium offerings, has been a beneficiary of flight to quality trend post pandemic, which resulted in higher tonnage growth, backed by greater digital connect with customers and focus on servicing bigger customers and brands
* We remain positive on the stock due to revival in its B2C and B2B segments and a continued expansion in margin profile
To Read Complete Report & Disclaimer Click Here
https://secure.icicidirect.com/Content/StaticData/Disclaimer.html
Above views are of the author and not of the website kindly read disclaimer
