ICICI Direct has given Buy recommendation for Transport Corporation of India with a target price of Rs. 320 in its research report issued on Feb 04, 2021

ICICI Direct’s research report on Transport Corporation of India

Transport Corporation (TCI) reported a strong set of Q3FY21 numbers. Revenues grew strongly QoQ (up 17%) and YoY (10.5%) to Rs 715 crore. SCM segment reported strong growth both QoQ and YoY (up 19% QoQ, 24% YoY), followed by the freight division (up 18% QoQ, 2% YoY) and shipping division (up 11% QoQ, 5% YoY). EBITDA margins expanded 86 bps YoY to 10.5% mainly due to higher gross margins (19.5% vs. 19% in Q3FY20) and lower employee to sales ratio (5% vs. 5.7% in Q3FY20). Resultant EBITDA grew 20% YoY to Rs 75 crore. Further, PAT grew 25% YoY to Rs 40 crore (exceptional expense of Rs 10 crore impacted profitability to certain extent).

Outlook

We value the stock at Rs 320/share and maintain our BUY rating on the stock (earlier target of Rs 280/share).

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