EUR 120.00 For Business Accounts Only

MOSL: TRANSPORT CORPORATION OF INDIA: Unique business model with multimodal capabilities to drive performance

(TRPC IN, Mkt Cap USD0.7b, CMP INR688, TP INR790, 15% Upside, Buy)

 

• We released our Logistics thematic report recently (), wherein we stressed upon the Logistics sector moving towards formalization. We noted that this would provide strong growth opportunities for some of the established players, such as Transport Corporation (TCI). The share price of TCI has been up ~45% since our initiation, and we believe there is more steam left.
• The unique multimodal capabilities of TCI would drive consistent growth in volumes and earnings across segments over the next few years. With the easing of fuel prices (on account of tax cuts), margins are expected to remain at elevated levels.
• TCI has a well-blended portfolio, with a presence across a) the high-volume Freight segment, b) value-added segments such as Integrated Supply Chain Solutions, and c) niche high-margins segments such as Seaways. We expect TCI to clock a revenue/EBITDA/PAT CAGR of ~17%/25%/33% over FY21-24. We reiterate our Buy rating, with revised TP of INR790/share (16x FY24E EPS).

 Volumes improve with robust festive demand in 2Q; margins hit all-time highs, driven by Seaways segment

• The easing of restrictions and robust festive demand has led to a strong pickup in volumes in the last few months.
• TCI reported all-time high margins of ~13% in 2QFY22. While Seaways saw strong margins with increased freight rates, Freight Services margins were driven by cost control and improved efficiency.