An effective asset-light model, price hikes and efficiency gains enabled TCI Express (TCIEXP) to deliver a strong EBITDA margin beat (15.3% vs. 11.5% est.), negating a 21% YoY topline fall (est. 15%).

Business activity, which gained momentum from May, saw phase wise pickup in manufacturing & related supply chain activities. With further easing of restrictions, the momentum stayed on the positive trajectory MoM. As per management, volumes have normalised in September (also confirmed by EWay bill generation). The management expects economic growth to grow in the positive territory in H2FY21 (channel filling amid festivities). Revival of SME sector remains key to TCI Express' fortunes. It is expected to tide over the current volatility by continued automation, enhancing technological capabilities and reducing field footprints. We expect the company to report a revival in revenue growth from FY22 driven by new branch additions &...

Lead indicators bounce back strongly

Two new owned sorting centres are also expected to start by Q3 FY21whichwouldhelpreducerentalcosts. WeexpectutilizationtoreachPreCOVIDlevelsbystartofH2FY21. Webelievesignificantpartofrevenuelosswouldbecoveredupin...

Increased digitisation, innovation to drive growth ahead Revenue growth in FY20 was flat YoY (slower than usual FY17-19 CAGR of 17%) owing to continuing crisis. FY21 has begun with a completely new landscape for the logistics business. While April was largely spent in addressing on-ground challenges (hiccups in interstate movement, greater micro-management of trucks), May has largely seen phase wise pickup in manufacturing & related supply chain activities. The management expects economic growth to normalise post H1FY21. Revival of SME sector remains...

Already reeling under a domestic consumption slowdown, the Indian logistics industry has now taken a severe blow from Covid-19-led trade disruptions.

Our recent interaction with the TCI Express (TCIEXP) management indicates severe pressure on near-term operational performance stemming from the Covid-19 outbreak.

TCI Express (TCIEXP) reported an in-line operating performance in Q3FY20 as solid gross margin expansion (+310bps YoY) compensated for muted topline growth (+2%).

Revenue growth in H1FY20 has been slower than usual at ~6% (FY17-19 CAGR of 17%) owing to slower economic growth leading to lower volumes. The company expects volume growth to pick up in H2FY20 driven by better traction from large customers and continued addition of new customers from the SME segment. We expect the company to report revenue growth of 8% for FY20 while the EBITDA margin is expected to improve due to...

Strong client addition from SME to aid revenue growth In spite of competition from rivals like Blue Dart, Gati and Rivigo, TCI Express has been consistently clocking double digit growth (15%+). Revenue growth has been driven by volume growth and increased business from addition of new customers. Q1FY20 appears to be impacted by the general slowdown in manufacturing activity and disruptions due to general elections. However, we expect the company to report revenue growth of 15% in FY20 driven by new client additions, particularly from the SME...

In spite of competition from rivals like Blue Dart, Gati and Rivigo, TCI Express has been consistently clocking double digit growth (15%+). Revenue growth has been driven by volume growth and increased business from addition of new customers. EBITDA margin for FY19 improved 140 bps to 11.6% owing to higher capacity utilisation and operational efficiency. Overall, the company has guided for | 400 crore capex spend in five years, which would be utilised to expand its reach in Tier 2, 3 cities (hub & spoke model - reach 1000 offices count), open newer sorting centres (currently 28...

India's US$ 160bn logistics industry is amidst a much-needed transformation led by (1) structural reforms (GST, e-way bill) and the government's infrastructure thrust (DFC, Sagarmala), (2) the emergence of new-age, service-oriented businesses versus asset-heavy models, and (3) growing formalisation of the sector, propelling organised players to the fore. We prefer the emerging 3PL and express segments for long-term value creation. Among stocks, MLL, FSCSL, and TCIEXP...

EBITDA margins increased 135 bps to 11% mainly due to lower than estimated operating expense to sales ratio (74.1% vs. 75.2% in Q2FY18). Robust revenue growth coupled with margin expansion resulted in absolute EBITDA growth of 38% YoY to | 27 crore Reported PAT grew 25% YoY to | 16 crore, in line with I-direct...

ICICI Securities Ltd | Retail Equity Research Revenues grew 23% YoY to | 249 crore (I-direct estimate: | 233 crore) Decline in operating expenses to sales ratio to the extent of 256 bps mainly led to resultant EBITDA margins expansion by 220 bps YoY to 11.4% (I-direct estimate: 10.5%). Robust revenue growth coupled with margin expansion resulted in absolute EBITDA growth of 53% YoY to | 28 crore (I-direct estimate: | 25 crore Reported PAT grew 50% YoY to | 18 crore (I-direct estimate: | 16...

Transport Corporation of India Ltd (TCI) is one of the largest integrated players in the organized logistics industry, providing Freight, supply chain, warehousing solutions and shipping services. It offers logistics solutions for B2B and B2C clients. Hero Motocorp, Maruti Suzuki India, Dr Reddy's Laboratories, BHEL, Cummins India, ITC, Bata India, Flipkart, Snapdeal are some of the key clients of TCI Express. TCI Express Ltd has laid out plans for ` 400 crore expansion over the next five years to modernize its existing 28 sorting centres across the country and scale up the IT network . The investment, funded through internal accruals, will scale up the company's revenues to ` 4,000 crore in the next five years from the ` 754 crore in 2016-17 . Post expansion, the company looks at about 20 million square feet of space at its sorting centres against the current 100,000-125,000 sqft....

ICICI Securities Ltd | Retail Equity Research Revenues grew by 22% YoY (up 12% QoQ) to | 229 crore. The management believes that the robust growth was on the back of...