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MOSL :TRANSPORT CORPORATION OF INDIA – ANNUAL REPORT UPDATE: Strong play on multimodal Logistics

.  TRANSPORT CORPORATION OF INDIA – ANNUAL REPORT UPDATE: Strong play on multimodal Logistics

(TRPC IN, Mkt Cap USD0.7b, CMP INR712, TP INR860, 21% Upside, Buy)

Focus on providing multimodal Logistics solutions to aid growth

• TRPC offers integrated Logistics solutions through its three business divisions: TCI Freight, TCI Supply Chain, and TCI Seaways. It also has a JV with CONCOR, where it provides rail transport solutions. Its presence across segments helped it cater to a larger market and provide customized value-added solution services as against mere transportation or warehousing.
• It has a fleet of more than 12,000 trucks, six cargo ships, more than 150 reefer vehicles, and 13m sq. ft. of warehousing space.
• While the freight services business is likely to benefit from a shift to organized from the unorganized sector, the supply chain will see a strong recovery driven by an improvement in the Auto sector.
• The Seaways segment, which is the highest margin segment for TRPC, is expected to continue its growth momentum in FY23. It plans to add capacity in its Seaways division by FY23-end, which should aid volume growth.

Seaways business drives earnings growth; on track to add a new ship by the end of FY23

• TRPC saw robust demand for its freight services and is looking to increase the mix of its high-margin less than truck load share (LTL) in the overall freight mix to 40% by FY23-end from 35% at present.
• In the Supply Chain business, the company provides technology-driven inbound and outbound transportation, warehousing, and yard management solutions. An improvement in the Auto vertical is expected to drive growth.
• The Seaways business witnessed strong upward momentum in FY22, along with the doubling of margin. The elevated margin in the Seaways business is likely to continue in the medium term.
• In FY22, TRPC divested 20% stake in its cold chain business to Mitsui & Co. for INR160m. It expects considerable growth from processed foods, QSR, and Pharmaceutical industries.
• It has pared its debt level to sub-INR1b from ~INR4b about two years ago.