Q3FY21 Result Update - Transport Corporation of India - ICICI Direct

Transport Corporation (TCI) reported a strong set of Q3FY21 numbers. Revenues grew strongly QoQ (up 17%) and YoY (10.5%) to Rs. 715 crore. SCM segment reported strong growth both QoQ and YoY (up 19% QoQ, 24% YoY), followed by the freight division (up 18% QoQ, 2% YoY) and shipping division (up 11% QoQ, 5% YoY). EBITDA margins expanded 86 bps YoY to 10.5% mainly due to higher gross margins (19.5% vs. 19% in Q3FY20) and lower employee to sales ratio (5% vs. 5.7% in Q3FY20). Resultant EBITDA grew 20% YoY to Rs. 75 crore. Further, PAT grew 25% YoY to Rs. 40 crore (exceptional expense of Rs. 10 crore impacted profitability to certain extent).

Valuation and Outlook

TCI has continued to improve its working capital position (lower receivables), which led to further debt reduction in Q3 (D/E at 0.3). Improvement in product mix (higher share of LTL and SCM) has further led to expansion in gross margins, which together with higher asset turnover is expected to achieve return ratios of 15-16% (in the medium to long term). TCI has shown focus on lowering operational costs and an effective capital allocation management. On an SOTP basis, we value the stock at Rs. 320/share and maintain our BUY rating on the stock (earlier target of Rs. 280/share).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_TransportCorp_Q3FY21.pdf

Shares of TRANSPORT CORPORATION OF INDIA LTD. was last trading in BSE at Rs.256.45 as compared to the previous close of Rs. 255. The total number of shares traded during the day was 2091 in over 181 trades.

The stock hit an intraday high of Rs. 258.35 and intraday low of 255.5. The net turnover during the day was Rs. 536383.

Source : Equity Bulls

Keywords