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Transport Corporation of India Ltd Research Report - 03rd Feb 2016

Logistics | Published on Feb 03rd 2016


Transport Corporation of India Ltd (TCIL)’s top-line & bottom-line for 3QFY2016 came in below our estimates. The top-line has come in flat on a yoy basis, with all business segments posting poor performances, barring the Seaways division. On the operating front, the company showed a slight improvement in margins. Further, lower interest costs and tax rate boosted the overall profitability. Muted standalone top-line performance: TCIL’s numbers for the quarter have come in below our estimates. The top-line, at ~Rs551cr, is flat on a yoy basis, with all business segments posting poor performances on the revenue front, barring the Seaways divisions, which reported a growth of ~16% yoy to ~Rs35cr. Slight improvement in operating margin and lower interest costs boost overall PAT: For the quarter, the company reported an operating profit of ~Rs44cr, up ~5% yoy. Further, the company’s operating margin expanded by 43bp yoy to 8.0%, primarily on account of decline in operating expenses as a percentage of sales by 207bp yoy. The net profit grew by ~11% yoy to ~Rs19cr. The growth however is lower than our estimate, mainly due to flattish sales during the quarter. Outlook and valuation: TCIL benefits from its pan-India scale, which gives it a competitive advantage in the 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 wellplaced to be a key beneficiary of the anticipated implementation of the GST. However, in the last few quarters, the company has not been able to report good numbers, both on the top-line and bottom-line fronts, due to delay in pick-up in economic activities. Hence we are maintaining our NEUTRAL rating on the stock.

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CMP 242
Target Price
Investment Period12 Months

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Shareholding Pattern (%)

Public & Others26.0
Grand Total100.0

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