ICICI Direct is bullish on TCI Express has recommended buy rating on the stock with a target price of Rs 780 in its research report dated May 23, 2019.
ICICI Direct's research report on TCI Express
TCI Express reported subdued volume (~5%) and revenue growth (~7%) in Q4FY19. The subdued performance comes in the backdrop of reporting double digit volume and revenue growth (in the range of 15-20%) for earlier three quarters in FY19. However, EBITDA margins reached an all-time high of 12.7%, mainly led by higher truck utilisation. Subsequently, absolute EBITDA and PAT grew 19% and 22%, respectively. Further, the management expects FY20 revenues to grow to 18-20%, with further expansion in margins (compared to FY19).
TCI Express has 28 hubs, 550 branches and a fleet of 4000+ vehicles at its disposal with minimal operational asset ownership. Low leverage, a robust growth trajectory and high core return ratios (FY21E RoCE at 39% and a 2% FCF yield), position TCIEL as one of the preferred picks in the logistics space. We value TCIEL at 26x P/E on an estimated EPS of Rs 29.6/share (FY21E) with a target price of Rs 780, with BUY recommendation.
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