TCI Express - Focus On Profitable Growth In B2B; Healthy Ramp-Up In New Segments: Motilal Oswal

BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy. .Motilal Oswal Report.TCI Express Ltd. has established itself as a leading logistics player with a pan-India reach, which gives the company an advantage against competition. The company focuses on the profitable business-to-business segment, which accounts for ~95% of its business. It also has a good blend of customers, with 50% of its revenue coming from small and medium enterprises and the balance from corporates. Over the years, TCI Express has developed a robust Hub-and-Spoke infrastructure, comprising over 950 owned centers across 60,000 locations in the country. While new segments, rail express and customer-to-customer express, are small parts of its overall business but are growing at a fast pace. TCI Express expects these high-margin segments to form nearly 25% of its overall business in FY25 from ~18% currently. After commissioning an automated center in Gurugram in FY22, the company is looking to automate the Pune facility in FY24. It would improve the turnaround time and reduce costs.During FY23, TCI Express incurred capex of Rs 1.25 billion, primarily for the purchase of land in Kolkata and Ahmedabad to set up new automated sorting center, a new corporate office in Gurgaon, and the network expansion by adding 35 new branches in key growing markets in the West and South regions. We expect TCI Express to achieve volume/revenue/Ebitda/profit after tax compound annual growth rate of 11%/13%/21%/21% over FY23-25, aided by automation and the transition from rental sorting centers to an owned model, resulting in better operating efficiency. The company plans to incur capex of Rs 5 billion over next five years for setting up its own sorting centers. It intends to have its own sorting centers in 11 cities by FY26. With targeted capex, a debt-free balance sheet and a focus on the highly profitable B2B segment, the outlook for TCI Express looks bright..Key downside risks: Any major slowdown in express logistics business and Any significant market share loss due to aggressive competition..Click on the attachment to read the full report:.Gati - Focus On Efficiency Improvement: Prabhudas Lilladher.DISCLAIMERThis report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

TCI Express - Focus On Profitable Growth In B2B; Healthy Ramp-Up In New Segments: Motilal Oswal

With targeted capex, a debt-free balance sheet, focus on highly profitable B2B segment, the outlook for TCI Express looks bright.

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