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On a strong footing led by integrated multimodal Logistics

* TRPC’s established presence across the multimodal Logistics value chain (Road, Rail, 3PL, and Water logistics) enables it to offer efficient end-to-end Logistics solutions, cater to a larger addressable market, and makes it the preferred choice for customers looking for complete solutions. These offerings have allowed it to sail through some challenging times. We believe TRPC is very well placed to capitalize on the growth opportunity.

* We expect revenue/EBITDA/PAT growth of 18%/13%/13% over FY22-24, factoring in an increasing share of LTL in the overall freight revenue, new client additions in 3PL, and sustained focus on coastal shipping. We maintain our Buy rating, with a TP of INR810 (17x FY24E EPS).

Freight and Supply Chain divisions well placed; on track to add a new ship in the Seaways vertical by FY23-end

* TRPC’s Freight Services business is likely to benefit from the shift to organized from the unorganized sector. The Freight segment will also benefit from the growing contribution from Less than Truck Load (LTL) services. It expects the share of LTL to rise to 40% by FY25 (v/s 35% in 1HFY23). The Organized FTL/LTL market is expected to grow at 40%/~34% CAGR over FY20-26E.

* In the Supply Chain business, TRPC provides technology-driven inbound and outbound transportation, warehousing, and yard management solutions. Recovery in the Automotive demand (~80% of Supply Chain revenue) is expected to aid growth in this segment. Customers in this business tend to be sticky, which provides decent growth visibility. The Integrated Supply Chain market is expected to clock ~20% CAGR over FY20-26E, with the organized market expected to grow even faster.

* The growth momentum in the Seaways segment, which is the highest margin garnering segment for TRPC, is expected to continue in FY23 and FY24. The management plans to add capacity in the Seaways division by FY23-end, which should aid volume growth.

Strong asset base aided by IT-enabled infrastructure; looking at growth focused capex

* TRPC has a fleet of over 12,000 trucks, six cargo ships, over 150 reefer vehicles, and 13m sq. ft. of warehousing space under management.

* It plans to add capacity in its Seaways division by the end of FY23, with a capex of INR800m.

* TRPC is also looking at a capex of INR2.5b in FY23, of which INR1-1.25b will be spent on acquiring ships and containers, INR300-500m on the purchase of trucks, and INR750m will be utilized towards building warehouses.

Valuation and view

* We maintain our positive stance on TRPC as it is expected to benefit from: a) strong Automotive demand, coupled with the addition of new clientele, driving 3PL growth, b) sustained thrust on demand for coastal shipping, c) traction in multimodal Logistics and, d) increasing contribution of LTL in the Freight segment, which will be margin-accretive.

* We expect revenue/EBITDA/PAT growth of 18%/13%/13% over FY22-24, factoring in an increasing share of LTL in the overall Freight revenue, new clientele in 3PL, and sustained trust for coastal shipping. We maintain our Buy rating with a TP of INR810 (17x FY24E EPS).

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