Transport Corporation of India - Margin contraction continues... - ICICIdirect

Transport Corporation of India (TCI) reported its Q3FY13 results with net sales at Rs.492.1 crore and PAT at Rs.11.4 crore. The topline was above our expectations of Rs.480.7 crore, mainly due to revenue of Rs.196.1 crore from the freight business, which beat our estimates of Rs.185 crore. However, the EBITDA was below our estimates while margins contracted 75 bps YoY to 7%, mainly due to higher operating costs.

We expect the revenue share of the low margin freight business to reduce from 43% in FY12 to 39% and 37% in FY13E and FY14E, respectively. We expect the combined contribution of the XPS and SCS division to grow from 52% to 65% in the same FY12-14E period.

We have valued the stock at 9x FY14E EPS and arrived at a target price of Rs.72.

Source : Equity Bulls

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