Neutral TCI Express Ltd For Target Rs.530 by Motilal Oswal Financial Services Ltd
In-line performance
* TCI Express’s (TCIE) 2QFY27 revenue grew 9% YoY to INR3.3b (in line). EBITDA stood at INR396m (+12% YoY), 4% above our estimate. EBITDA margin came in at 11.8% in 2QFY27 vs. our estimate of 11.6%.
* APAT rose ~6% YoY to INR267m (in line). Volumes grew 6% YoY to 0.265m tons.
* TCIE reported a steady performance in 2QFY27, backed by healthy surface segment growth, which was driven by higher yields and increased business from large enterprises. Management targets volume growth of 11-12% in 2HFY27 as it expects further improvement in SME demand to drive a recovery in overall demand. We broadly retain our FY27 and FY28 estimates and expect TCIE to deliver a CAGR of 6%/8%/11% in volume/revenue/EBITDA over FY26-28. We reiterate our Neutral rating with a TP of INR530, based on 18x FY28E EPS.
Key highlights from the management commentary
* 2Q volumes stood at 0.265m tons (+6% YoY). Capacity utilization was steady at 84%.
* The company implemented its annual general price increase along with a fuel surcharge revision in Jun'26 to offset higher fuel costs.
* The company has been able to pass on higher fuel costs to customers and has taken 1.5% net price hikes. Management expects this pricing momentum to continue in 3Q and 4QFY27, supported by the seasonal increase in demand during the peak period.
* For 2HFY27, management has guided for volume growth of 11-12% and revenue growth of 14-15% YoY.
* Management expects 50-100bp improvement in EBITDA margin in FY27, driven by cost optimization, higher automation benefits, and price hikes.
Valuation and view
* TCIE’s 2Q was broadly in line. We believe volume growth will gradually improve, supported by a recovery in demand from the SME segment, the rising contribution of the multimodal logistics segment, and ecommerce shipment volumes.
* We largely maintain our estimates for FY27 and FY28. We expect TCIE to clock a CAGR of 6%/8%/11% in volume/revenue/EBITDA over FY26-28. We reiterate our Neutral rating with a revised TP of INR530 (based on 18x FY28E EPS).
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