Accumulate TCI Express; target of Rs 1119 Prabhudas Lilladher

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Prabhudas Lilladher's research report on TCI Express

We cut our EPS estimates by 1.3%/3.6%/3.9% for FY25E/FY26E/FY27E amid rising volume challenges. TCI Express reported modest operational performance with EBITDA margin of 12.2% (PLe 13.1%) led by 1) weak demand as evident from capacity utilization of 83%, 2) inflation in transportation costs and 3) longer delivery lead time amid heavy monsoons. Given lower activity in manufacturing & auto sectors and weak performance in 1HFY25, we expect volumes to increase 2% YoY to 1mn MT in FY25E. However, for FY26E, we expect demand environment to improve and assume volume growth of 11% to 1.1mn MT.

Outlook

Overall, we expect revenue/PAT CAGR of 13%/30% over FY25EFY27E. Retain ‘ACCUMULATE’ with a TP of Rs1,119 (earlier Rs1,250) as we cut our target multiple to 28x (earlier 30x) given the ongoing challenges on volume and cost front.

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TCI Express - 04112024 - prabhu