Buy TCI Express, target price Rs 2300: ICICI Securities

ICICI Securities has buy call on TCI Express with a target price of Rs 2300. The current market price of TCI Express Ltd. is Rs 1583.7. Time period given by analyst is one year when TCI Express Ltd. price can reach defined target.

TCI Express Ltd., incorporated in the year 2008, is a Mid Cap company (having a market cap of Rs 6046.24 Crore) operating in Logistics sector.

TCI Express Ltd. key Products/Revenue Segments include Freight & Demurrage for the year ending 31-Mar-2021.


Financials
For the quarter ended 31-03-2022, the company reported a Standalone Total Income of Rs 300.28 Crore, up 3.91 % from last quarter Total Income of Rs 288.99 Crore and up 6.16 % from last year same quarter Total Income of Rs 282.86 Crore. Company reported net profit after tax of Rs 35.93 Crore in latest quarter.

Investment Rationale
TCI Express’ (TCIE) Q4FY22 print was lower-than- estimates; however, medium- and long-term revenue, margin guidance remain intact. TCIE aims Rs20bn+ revenue and 20% EBIDTA margin by FY25E, which is double of its revenue and triple of PAT. Calibrated capex to increase sorting centres and improve efficiency through process automation. Management is confident of increasing margin by 100bps p.a. and is yet to see any meaningful competition in the core areas of operation. With strong cashflow profile, the company had declared dividend of Rs2/share, taking total dividend to Rs8/share in FY22. In addition, the Board has also approved buyback amounting to Rs 750mn through open offer. It maintains BUY rating on TCIE with a target price of Rs2,300/share (based on 35x FY24E EPS); TCIE remains preferred pick in logistics sector. It acknowledges the risks to volumes and margins for FY23/24E (volume growth assumed at 25/20% for FY23/24E; EBITDA margin at 18/19%).

Promoter/FII Holdings
Promoters held 66.69 per cent stake in the company as of 31-Mar-2022, while FIIs owned 2.0 per cent, DIIs 8.12 per cent.