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Motilal Oswal Report
TCI Express Ltd.'s Q2 FY24 revenue grew 3% YoY to ~Rs 3.2 billion, in line with our estimate. Volume stood at 0.25 million tonnes (+2% YoY), while realisation rose ~1% during the quarter. In H1 FY24, volume grew ~3% YoY (0.49 million tonnes). Utilisation improved sequentially to 84%. Volumes were impacted by the shift of festival-linked demand to October 2023. Hence, Q3 FY24 is expected to witness strong volume growth.
Ebitda stood at Rs 505 million with margin of 15.8% (our estimate: 16.2%). Profit after tax came in at Rs 356 million (5% below our estimate) with margin of 11.1%.
TCI Express generated cash flow from operation of Rs 385 million in H1 FY24 versus Rs 1.5 billion in H1 FY23. Total cash and bank balance as of September 2023 were Rs 150 million.
Net working capital days stood at 23 in Q2 FY24 versus 24 in Q2 FY23. Return on equity/return on capital employed for H1 FY24 were at 22%/29%.
The Q2 performance was largely in line with our estimate. Given a softened outlook, we cut our earnings per share estimates by ~4%/3% for FY24/FY25.
We expect a compound annual growth rate of 8%/10%/16%/16% in volume/revenue/Ebitda/profit after tax over FY23-25, aided by automation and branch network expansion, resulting in improved operating efficiencies.
Capex of Rs 5 billion is envisaged over FY23-28 for setting up its own sorting centers and corporate office in Gurugram, Haryana. Reiterate 'Buy' with a revised target price of Rs 1,700 (based on 35 times FY25E EPS).
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