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This midcap stock rose 44% in a week, here's what brokerages say

ICICI Direct expects the expansion in EBITDA margins to continue from here on (100 bps each year), aided mainly by volume growth, as it expects the SME sector to bounce back, as the state-wide restrictions due to pandemic subsides

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Share of TCI Express rose nearly 10 per cent to hit a 52-week high of Rs 1226.60 on BSE in today's intraday trading session after the company posted robust earnings for the quarter ended March 2021.

The company reported a net profit of Rs 42.5 crore in Q4. Profit in the year-ago period stood at Rs 19 crore. Net income grew 18 per cent to Rs 282.8 crore for the quarter ended March 2021 compared to Rs 239 crore in the year-ago period.

For the fiscal year 2021, the net profit stood at Rs 100.60 crore, up 13 per cent as against Rs 89.08 crore in FY20. Net income declined 18 per cent to Rs 851.64 crore against to Rs 1036.33 crore in FY20.

As per the share price history on BSE, the share of TCI Express closed at Rs 944 on May 14, 2021. In a week, the stock has delivered nearly 44 per cent returns. Market cap of the firm rose to Rs 4,967.47 crore.

The stock opened 0.98 per cent higher at Rs 1261.00 against the previous close of Rs 1258.80. The stock has gained 128 per cent in one year and risen 40 per cent since the beginning of this year. TCI Express share stands higher than 5 day, 10 day, 20 day, 50 day, 100 day, and 200 day moving averages.

ICICI Direct expects the expansion in EBITDA margins to continue from here on (100 bps each year), aided mainly by volume growth, as it expects the SME sector to bounce back, as the state-wide restrictions due to pandemic subsides. The company is also banking on strengthening its IT network and automating its sorting centres to save further costs and lower turnaround times.

"The management further intends to strengthen its capability by automating its warehouses and providing innovative C2C services, express rail logistics, along with investments in newer geographies. We value TCI Express at 28x P/E with a target price of Rs 1400. We maintain our BUY recommendation," the brokerage firm added.

"The margins have been a positive surprise with good demand from SME segment and the Company was able to pass the rising fuel cost to its customers. Further, the company has ventured into two new verticals namely C2C express and cold chain which are high margin business and would gradually start contributing to the revenues," Yes Securities said.

"We have revised our FY22 and FY23 estimates to factor in the strong Q4 performance and improved outlook on profitability. Currently stock is trading at 25x FY23E EPS. We remain positive on the growth prospects and maintain our BUY rating for a revised target price of Rs 1,398 per share," it added.

"EBITDA margins improved to 20.3% as compared to 11.6% in Q4 FY20 and 17.8% in Q3 FY21. The margin improvement was driven by improvement in both volumes and realizations," said, Mr. Chander Agarwal, Managing Director, TCI Express.

"In addition, the Company was able to pass select cost to the customers as we continue to see an increase in fuel prices. Our asset-light model has also allowed us to maintain high capacity utilization and various cost control measures adopted during the year have helped us delivered strong profitability," he added.

Also, the board of directors has recommended a final dividend of Rs.2 per share for the financial year 2020-21, in addition to Rs 2 per share as an interim dividend.

TCI Express is India's leading time-definite express distributor. The company has expertise in enabling solutions for clients in sectors like consumer electronics, retail, apparel, lifestyle, automobile, pharmaceuticals, engineering, e-commerce, energy, power, and telecommunication.