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TCI Express - Gladiator Stocks - ICICI Securities

Posted On: 2020-09-11 10:01:04


Buy TCI Express in the range of Rs. 785.00-805.00 for target price of Rs. 945.00 with a stop loss of Rs. 740.00. Time Frame: Six months

Technical View

The stock has recently recorded 'Golden Cross', as 50 days moving average surpassed its long term 200 days SMA placed at Rs. 719, indicating conclusion of corrective phase. Currently stock is resolving higher after forming a higher base above its 200 days SMA placed at Rs. 720, which augurs well for resumption of next leg of major up move. Thereby offering fresh entry opportunity with favourable risk reward

Over past five months the share price has been trading in an upward channel (drawn adjoining April-May lows of Rs. 456 - 511 and projected from April high of Rs. 767), indicating positive bias. Recently, stock has bounced from its key support of 61.8% retracement of last leg of up move (Rs. 680 - 878) seen during August, at Rs. 755, highlighting strong support base

The daily 14 period's RSI logged a bullish crossover after bouncing from its six months rising trend line which corroborates with our positive stance

We expect the stock to resolve higher and head towards Rs. 945 in coming months as it is the upper band of rising channel is placed at Rs. 960

Fundamental View

- TCI Express is in the business of express logistics (1% of the logistics industry). Express logistics relates to time bound delivery of cargo, which generally charges a premium over other logistics services (first mile, last mile, FTL, LTL). TCI express is 95% B2B and 5% B2C. B2B business largely relates to the line haul operations that requires specific skills and is generally considered to have a stronger moat than B2C business (competitive and mainly relates to last mile delivery). SME comprises 50% of the revenues, rest 13%, 11% and 26% contributed by the Automotive, Pharma and Others (Engineering, telecom, Consumer durable and Lifestyle) respectively

- FY21 has begun with a completely new landscape for the logistics business while April was largely spent in addressing the on-ground challenges (hiccups in interstate movement, greater micro-management of trucks), May is largely been seen as a phased wise pickup in manufacturing and related supply chain activities. The management indicated that in May, operations were at 35% of pre-Covid level, which has increased to ~ 70% of pre-Covid levels in June. Revival of the SME sector remains key to the fortunes of TCI Express. The company is expected to tide over the current crisis by continued automation and enhancing technological capabilities and reducing field footprints. We expect it to report a revival in revenue growth from FY22 driven by new branch additions and expansion of clients in the SME segment. On the EBITDA margin front, we largely expect it to remain rangebound at 11-12%, going ahead.

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Shares of TCI Express Ltd was last trading in BSE at Rs.808.75 as compared to the previous close of Rs. 812.5. The total number of shares traded during the day was 5655 in over 1033 trades.

The stock hit an intraday high of Rs. 829.3 and intraday low of 793.1. The net turnover during the day was Rs. 4624370.

Source: Equity Bulls

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Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only., its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.

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