Transport Corporation of India - 4QFY2015 Result Update - Angel Broking

Transport Corporation of India (TCIL) reported a subtle top-line and bottom-line growth for 4QFY2015 on a standalone basis. The top-line growth was restrained due to subdued growth in Freight and Supply Chain Solutions segments. On the operating front, the company saw pressure due to increase in employee costs and other expenses, which led to lower profitability.

Subdued growth in Freight and Supply Chain Solutions segment restricted the overall top-line growth: For the quarter, TCIL registered a lower growth in its standalone top-line, ie of 5.6% yoy to ~Rs. 566cr, on back of lower growth in Freight and Supply Chain Solutions segments. However, the XPS and Seaways segment reported a decent growth on the revenue front.

Lower growth in operating profit resulted in lower PAT growth: Owing to lower growth in sales and operating profit, earnings grew by a subtle ~5% yoy to ~Rs. 22cr, for the quarter.

Outlook and valuation: TCIL benefits from its pan-India scale, which gives it competitive advantage in higher margin segments of the logistics industry; as well as from its asset-light business model which cushions its profitability in cyclical downturns and gives it an attractive ROE profile. The company is well-placed to be a key beneficiary of the anticipated implementation of the GST. On its implementation, there will be a more pronounced requirement among corporates for reliable pan-India logistics players to manage their hub-and-spoke supply chains. At the CMP, TCIL trades at a P/E of 12.6x its FY2017E earnings. Hence, we recommend a Buy rating on the stock with a target price of Rs. 293.

Shares of TRANSPORT CORPORATION OF INDIA LTD. was last trading in BSE at Rs.210 as compared to the previous close of Rs. 211.1. The total number of shares traded during the day was 87091 in over 2786 trades.

The stock hit an intraday high of Rs. 220 and intraday low of 208.3. The net turnover during the day was Rs. 18571866.

Source : Equity Bulls

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