Transport Corp. MD Bets On Freight Business To Drive Growth In Second Half

Transport Corporation of India Ltd. is poised to see better growth in the second half of the current financial year as compared to the first half, according to the company’s Managing Director Vineet Agarwal.

He told NDTV Profit that he expects growth across businesses in H2, particularly in the freight division.  

“We see that H2 is hugely the better half of this year for all businesses, including freight. Q3 is when MNCs close their books, Q4 is when Indian companies close their books,” he said.

TCI has reported a 12.6% year-on-year growth in revenue at Rs  1,131 crore in Q2 this year versus Rs 1,004 crore in the year-ago period. Net profit also jumped by 22.2% during this period to Rs 107.3 crore from Rs 87.8 crore in Q2 last year.

However, the company witnessed a dip in the freight business during the period under review.  

TCI's revenue from its freight division witnessed a muted 6% YoY growth to Rs 425.2 crore in Q2 from Rs 399.1 crore a year ago. Operating profit from the segment slipped 10.1% to Rs 13.8 crore over Rs 15.4 crore recorded in the similar period during the preceding fiscal. 

“I expect these numbers (revenue from freight business) with a top line growth of 6% should move closer to 10%, and the negative growth in the bottom line should improve,” Agarwal added.

He explained that the freight business of the company was affected a little due to external factors. “A little bit more than one-third of the freight business is less-than-truckload, not the full truckload business. The less-than-truckload business has been affected by the slow growth in the MSME sector.”

On the major factors that could hamper TCI's growth in H2, Agarwal said, “Geopolitical risks are extremely high and we know that fact. The direct implication of the geopolitical risk is fuel prices. If crude prices go up, then fuel prices go up and hence that would mean that we would have an impact domestically."

The TCI MD noted that higher interest rates are also likely to affect the growth in consumer durables, which could be a headwind for the company.

“Interest rates still remain high and that has impacted growth in four-wheelers, including consumer durables, etc, in the broader markets. If interest starts reducing, we should see growth in the consumer durable sector also start improving,” he said.

Shares of Transport Corp. closed marginally higher at Rs 1,038 apiece. In contrast, the benchmark Nifty 50 closed 0.9% lower at 24,180.80 on Friday.