Dolat Capital recommended accumulate rating on Transport Corporation of India with a target price of Rs 230 in its research report dated August 13, 2020.
Dolat Capital's research report on Transport Corporation of India
TCI reported a better than expected quarter amid challenging times. Revenues declined by 46% YoY driven by sharp -47%/-56%/-14% YoY growth in Freight segments /Supply Chain/Seaways segment. EBITDA margins at 8.5%. EBIT margins of Freight and Supply Chain at multi-year low while utilization stood 55-60%/45-50%. Management highlighted that (1) Company remains optimistic over it warehouse segment. (2) SCS Utilization levels have touched 80-85% in July and stocking is increasing before festive season. (3) Try to maintain FY20 levels margins (4) Capex for FY21 stood at Rs 1.25Bn, will add 1 ship in Q3FY21 (5) Secondary truck sales have picked up (6) Freight rates may increase or remain at existing levels (7) Consolidation happening across all segments.
With substantial improvement expected in coming quarters, we increase our EPS estimates by 13%/15% for FY21E/FY22E. We revise our target to Rs 230 at 11xFY22E with Accumulate rating.
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