Accumulate Transport Corporation of India Ltd For Target Rs. Rs.1,248 By Geojit Financial Services Ltd
In-line performance...momentum to persist
Transport Corporation of India Ltd. (TCI) is one of the largest integrated players in the organized logistics industry. Key business segments include freight, supply chain, warehousing solutions, & shipping services.
* Revenue grew by a healthy 15% YoY, which was in line with our expectations, led by healthy growth in freight and supply chain, which reported healthy double-digit growth.
* EBITDA grew by 19% YoY, and margins expanded by 30bps YoY to 10.3%, which was marginally below our estimates on account of higher operating costs.
* Net profit grew by 27% YoY, led by margin expansion and a higher share of profits from JV (24% YoY).
* Going ahead, stable volumes from freight business, strong growth from Ecommerce, and supply chain businesses, led by improving consumer sentiments will drive growth. While better volumes from Seaway business will support margins.
* We expect PAT to grow at a 16.1% CAGR over FY25E-27E, with stable margins of ~10.5%.
Outlook & Valuation
The long-term outlook for the sector is improving, given strong economic growth prospects and the increasing penetration of e-commerce. A recovery in government spending and an improvement in consumer spending will provide impetus for the sector. We continue to maintain a positive view on TCI given its well-diversified service offerings, a multi-sectoral presence, and a healthy balance sheet. We value TCI at a P/E of 18x as we roll forward to FY27E and maintain Accumulate rating with a target price of Rs.1,248.
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SEBI Registration Number: INH200000345
