Buy TCI Express; target of Rs 1270: Motilal Oswal

Motilal Oswal's research report on TCI Express

TCI Express (TCIE)’s 4QFY24 revenue decreased 3% YoY to ~INR3.2b (in line), while volumes declined 2% YoY in 4QFY24. The persistent challenges of subdued demand, especially in the lifestyle product segment, and elevated inventory levels at the customer-end led to slower dispatches for the quarter. Volumes stood at 0.26m tonnes (-2% YoY), while realization stood at INR12,291 per ton (down 1% YoY/QoQ each). EBITDA came in at INR448m with a margin of 14.1% (vs. our estimate of 14.4%). Margin was hurt by the weakness in volumes handled. In line with weak operating performance, TCIE’s APAT dipped 18% YoY to INR316m (vs. our estimate of INR328m). During FY24, TCIE reported a revenue of INR12.5b (+1% YoY), EBITDA margin of 14.9%, and APAT of INR1.3b (-5% YoY). It handled 1m tonnes of volume in FY24 (flat YoY).

Outlook

We largely retain our FY26 estimates and expect TCIE to clock a volume CAGR of 9% and revenue/EBITDA CAGR of 11%/15% over FY24-26. This growth will be driven by the expansion of the branch network and overall demand improvement. Reiterate BUY with a revised TP of INR1,270 (based on 28x FY26E EPS).