Buy Transport Corporation of India; target of Rs 1290: Motilal Oswal

Motilal Oswal is bullish on Transport Corporation of India recommended buy rating on the stock with a target price of Rs 1290 in its research report dated November 22, 2024.

November 26, 2024 / 15:59 IST

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Motilal Oswal's research report on Transport Corporation of India

Diversified service offerings (Freight, Supply Chain, and Seaways), coupled with sectoral resilience, helped TRPC maintain double-digit growth in 1HFY25. Total revenue grew 11% YoY in 1HFY25, supported by double-digit growth across business segments (11%/13%/17% YoY in Freight/Supply Chain/Seaways), despite margin pressures in Freight and Supply Chain. In Seaways, TRPC expects capacity utilization to remain high in 2HFY25, with only one dry-dock planned near FY25 end. Over FY21-24, the supply chain business has delivered a 16% revenue CAGR, aided by robust automotive demand. The segment is expected to maintain the double-digit rate given stable demand in the auto industry, as well as the retention and expansion of businesses with existing clients. The freight division is likely to benefit from a higher LTL contribution (40% by FY26E vs. 36% in Sep’24), a shift from the unorganized sector, and traction in multi-modal logistics. We expect a revenue CAGR of 14% over FY24-27.

Outlook

With a well-diversified logistics portfolio and strong multimodal infrastructure, TRPC is well positioned to capitalize on India's expanding logistics needs. We expect TRPC to achieve a 15% revenue CAGR over FY24-27, driven by continued growth in the supply chain division, a rising proportion of LTL shipments within the freight division, and a presence across the multi-modal logistics value chain (including a JV with Container Corporation for rail transportation). We reiterate our BUY rating with a TP of INR1,290 (based on 18x Sep’26 EPS).

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