Transport Corporation of India Q1 net profit grows to Rs 13.6 crore

MUMBAI: An increased share from high margin Supply chain management (SCM) division helped Transport Corporation of India (TCI) to maintain its net profits in a tough operating environment. On a y-o-y basis, its net profits grew 1% to Rs 13.6 crore in June 2012 quarter.

The share of trucking segment, which is the company's major operating segment, dropped to 39% in June 2012 quarter as against 44% during the same period last year. The express and SCM division contributed 27% and 26% respectively to the total revenues. The freight division saw a decline of 3.5% in revenues, whereas express and SCM division grew by 11% and 37% respectively.

Going forward, the growth in trucking division is likely to be under pressure due to the economic slowdown. The Automobile sector, which the company's major client in the trucking division is witnessing a slower growth. However, TCI's other two major divisions are likely to grow at a healthy rate.

At current market price of Rs 63, the stock is trading at a P/E of 8.8. the present stock price factors the low growth in its trucking segment. Any pick up in demand is likely to improve performance of the company.