Neutral TCI Express Ltd for the Target Rs 570 by Motilal Oswal Financial Services Ltd
In-line performance
* TCI Express’s (TCIE) 1QFY27 revenue grew 9% YoY to INR3.1b (in line). EBITDA stood at INR336m (+12% YoY), 5% above our estimate. EBITDA margin came in at 10.8% vs. our estimate of 10.4%.
* APAT rose ~7% YoY to INR224m vs. our estimate of INR218m.
* Volumes grew 7% YoY to 0.25m tons.
* TCIE reported a steady performance in 1QFY27, backed by healthy surface segment growth, which was driven by improvement in SME demand, the scale-up of e-commerce shipment volumes and multimodal segments. Management targets volume growth of 11-12% in FY27 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%/7%/11% in volume/revenue/EBITDA over FY26-28. We reiterate our Neutral rating with a revised TP of INR570, based on 20x FY28E EPS.
Key highlights from the management commentary
* 1Q volumes stood at 0.25m tons (+7% 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 full benefit of these pricing actions is expected to be reflected from 2QFY27 onward.
* Ecommerce shipments grew strongly by 63% YoY, though it comprises only ~2- 3% of the total share, which management targets to scale up to ~5% as it is a high-growing segment.
* For FY27, management has guided for volume growth of 11-12% and revenue growth of 13-15% YoY.
* Management expects a 100-150bp improvement in EBITDA margin in FY27, driven by cost optimization, higher automation benefits and price hikes.
Valuation and view
* TCIE’s 1Q 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%/7%/11% in volume/revenue/EBITDA over FY26-28. We reiterate our Neutral rating with a revised TP of INR570 (based on 20x FY28E EPS).
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