Neutral TCI Express; target of Rs 730: Motilal Oswal

Motilal Oswal recommended Neutral rating on TCI Express with a target price of Rs 730 in its research report dated September 29, 2025.

Broker Research

September 30, 2025 / 12:31 IST

Neutral

26 Aug, 2025 12:21

Volume

Todays L/H

Motilal Oswal's research report on TCI Express

We maintain a neutral stance on TCI Express (TCIE) due to ongoing challenges in volume and profitability. TCIE is experiencing weak demand in certain industrial segments, including manufacturing, automobiles, and textiles, despite a healthy growth of ~22% YoY in e-way bill generation over Apr-Aug’25 and an 8.3% growth in the Index of Industrial Production (IIP) for manufacturing motor vehicles, trailers, and semi-trailers—a key segment for TCIE—during Apr-Jul’25. This weakness in demand indicates that intense competition has hit TCIE’s business performance and volume growth. While management expects an 8–9% tonnage (vs. a 1% volume dip in FY25) and 11–12% revenue growth in FY26, the margin improvement target could face challenges from persistent cost pressures, inflationary labor expenses, and relatively lower margins in international air express. TCIE has also planned a capex of INR2.8b over FY26-27, which would mainly be for sorting center automation and network expansion, as dependence on higher-margin multimodal segments could pose risks if demand recovery is slower than anticipated.

Outlook

While the long-term outlook for surface express services remains positive, near-to-medium-term headwinds such as heightened competition and elevated freight costs are likely to weigh on margins and volumes. We expect TCIE to achieve an 8%/9%/20% volume/revenue/EBITDA CAGR over FY25-27. We reiterate our Neutral rating with a TP of INR730 (based on 22x FY27 EPS).

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