TCI Express - Q1FY21 Result Update - ICICI Securities

TCI Express' (TCIEL) revenues were below I-direct estimates but it performed better than our expectation on the profitability front owing to reduction in certain fixed costs mainly due to its asset light model. Revenues for Q1FY21 de-grew 65% YoY to Rs. 89 crore (I-direct estimate: Rs. 102 crore) EBITDA margins fell 930 bps YoY to 2.3%, better than our expectation of loss at the EBITDA level. EBITDA for the quarter de-grew 93% YoY to Rs. 2 crore (I-direct estimate: loss of Rs. 8 crore). The company has been able to lower the fixed cost by negotiating with lessors of its branch premises across India to reduce/waive the rent for April. Also, employee and other expenses fell 26% and 36% YoY, respectively. Subsequently, net profit declined 95% YoY to Rs. 0.9 crore (I-direct estimate: net loss of Rs. 10 crore.

Valuation & Outlook

Covid-19 continues to impact express logistics but startups funded by private equity are seeing greater stress in cashflow management that can deter them from dealing in unprofitable business, lowering competitive intensity in the segment. Asset light business model, high core return ratios (FY22E RoCE at 29), position TCIEL as one of the preferred picks in logistics space. We value TCIEL at 30x P/E with revised TP of Rs. 825 and a BUY rating.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_TCIExpress_Q1FY21.pdf

Shares of TCI Express Ltd was last trading in BSE at Rs.722.35 as compared to the previous close of Rs. 686.2. The total number of shares traded during the day was 11512 in over 1690 trades.

The stock hit an intraday high of Rs. 757 and intraday low of 672.55. The net turnover during the day was Rs. 8374912.

Source : Equity Bulls

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