Buy TCI Express; target of Rs 1150: ICICI Direct

ICICI Direct's research report on TCI Express

TCI Express (TCIEL) continued its strong QoQ momentum in topline (up 23%) and bottomline (up 43%) while it lagged in YoY revenue comparable (flat YoY). However, due to significant margin expansion, TCI Express posted healthy growth (up 32%) on the YoY profitability front. MoM the performance remained mixed as recovery during the month of October (led by festive season) saw contraction of core industries in November. EBITDA margins expanded 449 bps YoY (198 bps YoY) to 17.3% mainly due to cost control measures employed by the company, which is evident in lower employee, other expenses and higher gross margins. Subsequently, absolute EBITDA grew 32% YoY (39% QoQ) to Rs 45 crore. Buoyed by the strong operating performance, PAT grew 32% to Rs 34 crore (43% QoQ).

Outlook

We value TCIEL at 33x P/E with a target price of Rs 1150 (earlier price Rs 900). We maintain our BUY recommendation.