Transport Corporation of India - Q2FY21 Result Update - ICICI Securities

TCI reported strong Q2FY21 results. Revenues grew strong QoQ (up 87%), which led to normalisation of revenues YoY to Rs. 612 crore. SCM reported highest recovery QoQ (up 134% QoQ, 2% YoY), followed by freight division (up 76% QoQ, down 9% YoY) and shipping division (up 37% QoQ, 9% YoY). The company continued to show resilience on the margins front. EBITDA margins expanded 63 bps YoY to 9.6% mainly due to lower employee and also other expenses to sales ratio (lower than estimates by 160 bps, 80 bps, respectively) although GMs negated the improvement, to an extent. The resultant EBITDA grew 4% YoY to Rs. 59 crore. Further, PAT grew 29% YoY to Rs. 32 crore (exceptional expense of Rs. 10 crore in the base quarter).

Valuation & Outlook

On the balance sheet front, TCI has improved its WC position (leading to payment of short term borrowings) and lowered its debt (while this also has an element of deferment of discretionary capex) and improved its liquidity position (the management is continually showing efforts in maintaining margins even in a scenario of weak operating leverage). It has a diversified portfolio of value-added services across varied customers & industries, lowering volatility in gross margins. For the year, the management expects demand from the e-commerce, FMCG, automobile sector, agriculture, pharmaceuticals and the chemical sector. Also, TCI has transitioned to the post-Covid business landscape where customers demand greater digitisation, live tracking and online presence. On an SOTP basis, we value the stock at Rs. 280/share and maintain our BUY rating on the stock.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_TransportCorp_Q2FY21.pdf

Shares of TRANSPORT CORPORATION OF INDIA LTD. was last trading in BSE at Rs.225 as compared to the previous close of Rs. 226.2. The total number of shares traded during the day was 2909 in over 292 trades.

The stock hit an intraday high of Rs. 232.55 and intraday low of 222.1. The net turnover during the day was Rs. 665116.

Source : Equity Bulls

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