TCI Express Ltd. share price target

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...