Hold TCI Express; target of Rs 816: Prabhudas Lilladher

Prabhudas Lilladher's research report on TCI Express

We cut our EPS estimates by 8%/12% for FY26E/FY27E and downgrade TCIEXP to HOLD (earlier BUY) amid persistent volume growth challenges and pricing pressure. TCIEXP reported weak set of results as revenues declined 3.0% YoY to Rs3,075mn (PLe Rs3,033mn) with an EBITDA margin of 9.2% (PLe 11.2%) as volumes declined for 6th quarter in a row to 255,000 MT. Pricing pressure was also evident as realization was down 1.5% YoY to Rs12,058 per ton. Given stiff competition, we expect volume and realization CAGR of 6%/1% over FY25- FY27E.

Outlook

However, EBITDA margin is expected to improve 430 bps over the next 2 years amid improvement in utilization levels to 84% by FY27E. We expect sales/PAT CAGR of 8%/29% (driven by low base) over FY25-FY27E and downgrade the stock to HOLD with a TP of Rs 816 (22x FY27E EPS; no change in target multiple).