Buy TCI Express, target price Rs 1306: ICICI Securities

ICICI Securities has buy call on TCI Express with a target price of Rs 1306. The current market price of TCI Express Ltd. is Rs 1215.

TCI Express Ltd., incorporated in the year 2008, is a Mid Cap company (having a market cap of Rs 4250.86 Crore) operating in Logistics sector.

Financials
For the quarter ended 31-03-2021, the company reported a Standalone Total Income of Rs 282.86 Crore, up 7.08 % from last quarter Total Income of Rs 264.16 Crore and up 18.30 % from last year same quarter Total Income of Rs 239.11 Crore. Company reported net profit after tax of Rs 42.57 Crore in latest quarter.

Investment Rationale
TCI Express (TCIE) reported higher than expected EBITDA and PAT on the back of better than expected margins. EBITDA margins have again expanded ~260bps QoQ/960bps YoY to reach 19.6%. Q4FY21 volumes were up 15% YoY, while blended realisations including the pass-through for diesel price hike was 2.3%. This is not akin to runaway price hikes that are seen in air-express as belly cargo stays off the curb. Margin salience in road express has been more driven by i) cost control ii) asset light nature of business and better bargaining power over truckers as rail keeps on pressurizing road freight. Increase in pricing with improvement in domestic manufacturing can be added optionality for operationally efficient players like TCIE with proper business moat. In addition, none of the margin buoyancy is driven by ecommerce bulge. It maintains BUY with a revised target price of Rs 1306/share (Rs 1109/share earlier).

Promoter/FII Holdings
Promoters held 66.8 per cent stake in the company as of March 31, 2021, while FIIs held 2.3 per cent, DIIs 10.3 per cent and public and others 20.6 per cent.

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