IGI Logo

In-line performance; outlook remains bright

* Transport Corporation of India’s (TRPC) revenue grew 14.5% YoY to ~INR11.5b in 3QFY25 (in line). EBITDA margin came in at 10.3% (est. 10.8%), up 40bp YoY and down ~10bp QoQ. EBITDA increased 19% YoY to INR1.2b, while APAT grew 27% YoY to ~INR1b (est. INR1b).

* Supply chain revenues grew 14.8% YoY, while the freight /division and seaways divisions reported ~19%/9% YoY growth.

* EBIT margin for the freight /supply chain/seaways divisions stood at 2.4%/6.1%/32.7% in 3QFY25. EBIT margin for the freight/supply chain businesses contracted by 70bp/40bp YoY, while EBIT margin for the seaways business expanded by ~1100bp YoY.

* 9MFY25 revenue/EBITDA/APAT grew 12.5%/12.7%/19.9% YoY to INR33.1b/ INR3.4b/INR2.3b.

* 3QFY25 performance was in line with our estimates, aided by growth in the supply chain and seaways divisions, both of which are expected to see rapid growth ahead. The supply chain segment’s revenue contribution is likely to increase, while the seaways division is poised for strong growth in 4QFY25, with all ships operational. The freight services segment is also set to gain momentum as infrastructure spending picks up. We largely retain our estimates for FY25/FY26/FY27 and reiterate our BUY rating with a TP of INR1,370 (based on 20x Sep’26 EPS).

Freight segment muted; Supply chain and seaways perform well

* TRPC reported 19% growth in freight services in 3QFY25 with EBIT margin of 2.4% (-70bp YoY). Growth challenges were attributed to a slowdown in the infrastructure and capital goods sectors. TRPC focuses on network expansion, with 64 new branches added in 9MFY25 to boost LTL segment.

* The supply chain business continues to grow with new contracts, strong performance in key areas like warehousing and multimodal services, stable margins, and a solid pipeline for 4QFY25 and FY26. It remains a strategic priority, with TRPC aiming to make it the largest segment by FY26, ensuring sustainable growth ahead.

* The seaways business beat expectations as freight rates recovered and average fuel prices remained stable. All ships were fully operational in 3Q and are expected to remain fully operational in 4Q as well.

Highlights from the management commentary

* The freight division was impacted by weakness in infrastructure, capital goods, and MSME sectors that led to slower LTL growth, prompting strategic adjustments. The company continues to aim for 40% LTL penetration in the freight business by FY26 and is focusing on expanding its network with 64 new branches added in 9MFY25.

* The seaways segment performed well in 3QFY25, driven by higher freight rates and full-scale operations by all ships, which is expected to continue in 4QFY25 as well. Prices of second-hand ships remain high, and management is evaluating all the options to increase capacity.

* The supply chain business is growing through new contracts and strong traction in key areas. With stable margins and ongoing contracts expected to drive significant growth, the supply chain business is expected to become TRPC's largest segment by FY26.

* In FY25, the company expects revenue/PAT growth of 10%/15% YoY with capex to the tune of INR 2.5b.

Valuation and view

* TRPC is gaining significant advantages as a multi-modal logistics provider, standing out as the only player in the domestic logistics industry offering services across road, rail, and sea. With its well-established infrastructure, strong customer relationships, and an experienced management team, TRPC is well-positioned to strengthen its status as the preferred third-party logistics (3PL) partner.

* We have largely retained our estimates for FY25/FY26/FY27 and expect TRPC to deliver a CAGR of 15%/19%/17% in revenue/EBITDA/PAT over FY24-27. We reiterate our BUY rating on the stock with a TP of INR1,370, based on 20x Sep’26 EPS.

For More Research Reports : Click Here 

For More Motilal Oswal Securities Ltd Disclaimer
http://www.motilaloswal.com/MOSLdisclaimer/disclaimer.html
SEBI Registration number is INH000000412