The company is debt-free and its strong compounded earnings growth with a high return on equity should drive upside from current levels, said Jefferies. The firm values the stock at 40 times FY24 estimated price to earnings which implies a potenti...
By ET Bureau | Updated:
TCI's track record shows that it is growing slower than the market and focused on improving margins as well as cash flows, the brokerage said.
Mumbai: Jefferies has initiated coverage on TCI Express with a buy rating and a target price of ₹2,300 as it believes the company is ahead of the curve in the logistics sector. The stock rose 7.3% to ₹1,847.30 on Wednesday.
One of India's leading players in the time-sensitive express part truckload market, TCI Express' management is focused on profitable business with healthy cash flows, said Jefferies.
"Organised players in logistics are poised for strong growth. TCI has an edge if being ahead of the curve given its experience," said the brokerage in a client note. "Trucking fleet relationships, customer relationships, historical land bank for setting up key sorting centres are the drivers of its high return on equity and margin management even in an inflationary environment," the brokerage said.
The company is debt-free and its strong compounded earnings growth with a high return on equity should drive upside from current levels, said Jefferies. The firm values the stock at 40 times FY24 estimated price to earnings which implies a potential upside of over 30% to the current price.
"We believe TCI Express should see a 23% revenue CAGR (compounded annual growth rate) in FY21-FY25, driven by organised players gaining share in the logistics market. GST implementation and e-way bill helped growth in FY16-FY19, which should continue hereon too," said Jefferies.
The Covid pandemic impacted revenues between FY20 and FY22, but the company should cross revenues of FY20 in FY22, the brokerage said.
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The net profit of TCI Express rose 4.5% to ₹35.13 crore in the December quarter while sales rose 9.3% to ₹286.92 crore.
Jefferies said TCI Express is a profitable express player unlike the new-age peers such as Delhivery, Rivigo and E-commerce, which are growing exponentially but making losses.
TCI's track record shows that it is growing slower than the market and focused on improving margins as well as cash flows, the brokerage said.
