Transport Corporation surges 62% in four days on strong Q4 results

Shares of Transport Corporation of India (TCI) moved higher by 17 per cent to Rs 495 on the BSE in the intra-day deal on Monday, taking gains to 62 per cent in the past four trading days after reporting a strong set of March quarter (Q4FY21) numbers.

The stock of TCI, India's largest integrated logistics service provider serving 3000 destinations, was quoting at its all-time high level. In the past one month, the stock has zoomed 100 per cent, as compared to a 5.4 per cent rise in the S&P BSE Sensex.

In Q4FY21, TCI reported a 69 per cent year-on-year (YoY) growth in standalone profit after tax (PAT) in the March quarter (Q4FY21) at Rs 52.86 crore, on the back of healthy revenue growth. It had reported a PAT of Rs 31.28 crore in Q4FY20. The company’s revenues grew 27 per cent YoY to Rs 797 crore. EBITDA (earnings before interest, taxes, depreciation, and amortisation) margins expanded by 147 basis points (bps) YoY to 10.7 per cent, mainly due to a combination of higher gross margins, lower employee to sales ratio and lower other expense ratio.

As per the management, in spite of the challenges posed by the pandemic in FY21, the company was able to sustain its revenues and margins due to its diversified portfolio of value-added services. All segments have performed well due to continuous focus on building strong customer relationships, superior multimodal network, and diversified portfolio of value-added services from design to execution. The emerging business units have also shown good traction, TCI said.

FY21 heralded a shift in consumer behaviour, with increased social distancing norms and intermittent statewide lockdowns, the end-user adopting delayed gratification via online purchases versus pre-pandemic instant gratification via purchases in stores.

The management expects a pickup in surface freight activity from H2 onwards (near festive season). Seaways division has been beneficiary of ongoing higher ocean freight realisation and better fleet utilisation. TCI saw growth in the e-commerce, FMCG sector along with demand revival in the automotive sector (~80 per cent of supply chain management or SCM). The management expects to add another ship in Q4FY22 (Rs 80 crore) and also purchase containers, rakes and few trucks (Rs 120-140 crore) in FY22.

“On the balance sheet front, TCI reduced its gross debt by Rs 130 crore in FY21, while generating Rs 300 crore of CFO (by keeping a tight leash on working capital). Going forward also, we expect the healthy CFO generation to continue with a net-debt free b/s. The management expects an improvement in margins by 50-100 bps (via better product mix, tech integration and cost control measures), which together with higher asset turnover is expected to achieve return ratios of 16-17 per cent (in the medium to long term),” ICICI Securities said in a result update. However, the stock surpassed the brokerage firm target price of Rs 490 per share in intra-day trade today.

At 11:43 am, TCI was trading 13 per cent higher at Rs 480 on the BSE, as against a 0.70 per cent gain in the S&P BSE Sensex. The trading volumes on the counter jumped over five-fold with a combined 4.5 million shares having already changed hands on the NSE and BSE so far.