ICICI Direct has given Buy recommendation for Transport Corporation of India with a target price of Rs. 490 in its research report issued on May 27, 2021

ICICI Direct’s research report on Transport Corporation of India

TCI reported a strong set of Q4FY21 numbers. Revenues grew a strong 27% YoY (11% QoQ) to Rs 797 crore. Seaways segment reported strong growth both sequentially (up 25%) and YoY (up 24%), followed by the freight division (up 18% QoQ, 20% YoY) and SCM division (flat QoQ, up 41% YoY, due to low base in Q4FY20). EBITDA margins expanded 147 bps YoY to 10.7%, mainly due to a combination of higher gross margins (19.5% vs. 19% in Q4FY20), lower employee to sales ratio (5.3% vs 6% in Q4FY20) and lower other expense ratio. The resultant EBITDA grew 48% YoY to Rs 86 crore. Further, PAT grew 69% YoY to Rs 53 crore (exceptional expense of Rs 3.5 crore due to impairment in wind power plant and investment in a subsidiary, impacted profitability to certain extent).

Outlook

We value the stock at Rs 490/share (SOTP basis) (earlier Rs 320) and maintain BUY rating.

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