Good information on TCI express here. I am no logistics sector expert but TCI seems like a fundamentally strong company with a vision to expand their operations consistently, adding automated sorting facilities, focusing on a very diversified client base (top 25 clients contribute to only 15 per cent of revenue), government initiative to strengthen logistics sector and focus on infrastructure is a tailwind, targeting rev growth of 15% + while maintaining margins. Only question is what valuation is justified? It is trading at 38 PE now (Blue dart is trading at 48) but is at a 52 week low w.r.t price.
Its a paid article so extracting key info and providing it here:
TCI Express has 82 per cent of revenue coming from Surface express while 18 per cent comes from other services (rail express, Air express, C2C express, Pharma Cold chain express). The company reported highest revenue achieved in any quarter till date in March 2023 quarter. This growth was driven by one, strong demand from SME and corporates, and second, higher utilisation of newly developed sorting facilities. The overall utilisation of FY23 was 84.25 per cent.
The key business drivers for the company are automation of the sorting centres, expansion of branches, having a diversified client base of both corporates and SMEs spread across industries and finally the government initiative to strengthen logistics sector and focus on infrastructure to provide seamless connectivity to remote rural areas.
The new sorting centre at Gurgaon was commissioned in March 2022. This centre is fully automated and one of the largest B2B sorting centres in India. The management will continue to implement the automation strategy in other sorting centres to enhance overall operational efficiency and ultimately to drive profitability further. TCI Express has 28 sorting centres and more than 500 express routes across the country.
The company has been continuously adding branches in order to gain business and increase presence. In 2017, it had around 500 branches across the country, now it has more than 950 branches. In FY23 the company opened 35 new branches. The management expects the new branches, although small, to generate good and profitable business. These branches are useful in adding small and SME customers which bodes well in the overall strategy of the company.
The company has a well-diversified client base of both corporates and SMEs/small customers in the proportion of 50 per cent each. The top 25 clients contribute to only 15 per cent of revenue. Revenue grew 14.7 per cent YoY in FY23 to ₹1,241 crore, EBITDA rose 7.2 per cent YoY to ₹1,95.2 crore in FY23. EBITDA margin during the year was 16.2 per cent against 16.8 per cent in FY22. EPS rose 8.2 per cent to ₹36.2 per share.
The company has given a revenue growth guidance of 15-16 per cent for FY24 and margin expansion of 100 basis points is also targeted. The 100 basis points increase in FY23 could not be achieved as the company did not take a price hike in FY23. However, it has decided to take price hike in FY24.
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