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Motilal Oswal Report
Our investment thesis on TCI Express Ltd. is premised on:
its presence in the high margin business-to-business express segment,
expanding branch network in key markets, targeting the small and medium enterprise segment (the company added 73 branches between April 2021 and Dec 2022),
incremental revenues from new services such as air express, rail express, cold chain express, (~18% of revenues in Q3 FY23), and
addition of new automation sorting centers, which will potentially reduce turnaround time.
TCI Express is a well-established player in the express logistics segment, with a pan India presence. It has built a solid hub and spoke infrastructure with 925 plus owned centers across India, servicing more than 50,000 locations across the country.
Equipped with a well-diversified client base, the company focuses on the high margin B2B space (95% share). ~50% of its revenue comes from SMEs, which we believe forms its loyal customer base.
TCI Express is expected to achieve revenue/Ebitda/profit after tax compound annual growth rate of ~11%/19%/19% over FY23- 25, aided by automation and the transition from rental sorting centers to an owned model, resulting in improved operating efficiencies.
Management has guided for a capex of Rs 5 billion, over the next five years, toward setting up own sorting centers and corporate office in Gurugram, Haryana. The company intends to have its own sorting centers in over 11 cities by FY26.
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