ICICI Direct is bullish on Transport Corporation of India has recommended buy rating on the stock with a target price of Rs 330 in its research report dated July 30, 2019.
ICICI Direct's research report on Transport Corporation of India
Transport Corporation of India (TCI) reported 5% revenue growth. The freight (~46% of standalone revenues) and shipping division (16%) grew 7%, 10%, respectively, whereas supply chain division (39%) remained flat. EBITDA margins improved 36 bps to 9.2%, mainly due to lower operating cost to sales ratio (80.7% vs. 81.1% in Q1FY19). Subsequently, resultant EBITDA, PAT grew 10%, 6%, respectively. The company has adopted Ind-AS 116 “leases” standard, which had an insignificant impact on profitability. The management expects demand recovery in forthcoming quarters, helped by factors like stable crude oil prices, moderate inflation with expected policy initiatives by the Central government. Industrial auto segment (CV, earth moving equipment) is expected to provide a push to the SCS segment (triggers include BS-VI pre-buy in the CV segment).
On an SOTP basis, we value the company at Rs 330/share with a BUY rating on the stock.
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