Reduce TCI Express: target of Rs 700: Emkay Global Financial

Emkay Global Financial's research report on TCI Express

TCI Express (TCIE)’s Q1FY26 results were in line with our muted expectations. The company’s efforts to diversify business beyond surface express seem to be fructifying, as international air express/C2C segments registered 33%/14% YoY growth, respectively. While margins in new services (especially air express) are lower than those for surface, we view the management strategy of growing its multimodal services toward contributing 20-22% of overall revenue in coming 2-3 years positively, given the diversification benefits. Owing to elevated competitive intensity in surface and a challenging external environment, we maintain our low expectations – only 5% volume growth trajectory over FY25-28. We believe TCIE’s investment in automation, while being beneficial in the long term, would keep return ratios and margins under pressure, especially given the current tepid environment.

Outlook

We cut FY27E/28E EBITDA by 6%/5%, respectively, factoring in the lower margins from new services, while retaining REDUCE. Jun-26E TP of Rs700 remains unchanged (basis DCF methodology), implying FY27E EV/EBITDA of 16x and P/E of 25x.