ICICI Direct is bullish on Transport Corporation has recommended buy rating on the stock with a target price of Rs 360 in its research report dated November 05, 2018.
ICICI Direct's research report on Transport Corporation
Revenues grew 19% YoY to Rs 620 crore. Freight & shipping division grew 27% and 36% to Rs 293 crore and Rs 79 crore, respectively, whereas supply chain division grew mere 9% to Rs 255 crore EBITDA margins contracted 106 bps to 8.6% (I-direct estimate: 9.8%). Margins came in below I-direct estimates mainly due to higher operating expense to sales ratio led by a change in product mix, increased fuel prices (81.7% vs. estimated 80%). Resultant EBITDA grew mere 6% YoY to Rs 53 crore Reported PAT came in flat YoY to Rs 26 crore as weak operational result was impacted by higher depreciation and interest expense.
With multi-modal capabilities, we believe TCI has developed a strong moat around its business thereby delivering sustainable growth rates. On an SOTP basis, we value the company at Rs 360 per share with a BUY recommendation on the stock.
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