Dolat Capital recommended accumulate rating on Transport Corporation of India with a target price of Rs 345 in its research report dated May 18, 2018.
Dolat Capital's research report on Transport Corporation of India
Revenue up by 25.7%YoY to ` 6052.5mn; grew 9% QoQ from ` 5,553.1mn. EBITDA grew by 53.6%YoY to ` 604.2mn, up 14.8% QoQ from ` 526.2mn. EBITDA margins grew 182bps YoY to 10%; grew 51bps QoQ. Net Profit grew by 76% YoY to ` 326mn, grew 16.9% QoQ from ` 279.1mn. Net profit margin grew 154 bps YoY to 5.4%; grew 37bps QoQ. Freight revenues were up 15.2% YoY to ` 2,984.1mn; grew 15.4% QoQ from ` 2,585.9mn because of improved revenues from LTL business and better receivable increasing capital efficiency. As per the management the increase in industry utilisation rate from 67% to 75% YoY improved the topline and bottom-line numbers. Port GST & E-way bill organised sector is performing better but will take ~2 years to stabilise.
We have a positive view on the company with growth drivers to continue from SCM (42-45% of total revenue mix) and Coastal shipping business providing multi modal transportation services for longer distances and higher tonnages post GST and E-way bill implementation. Also, with Demand from Engg, Auto Ancillary, FMCG and project cargoes segment increasing, we are likely to see earnings CAGR growth of 18-20% FY18-20E. We continue to maintain our Accumulate rating with TP ` 345.
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