TCI - Addition Of Ships, Traction In Multi-Modal Logistics To Aid Growth: Motilal Oswal

Motilal Oswal Report

Transport Corporation of India Ltd.’s revenue is likely to grow steadily in the medium term backed by:

1. the higher share of less than truck load in the freight division (36% in H1 FY24 versus 33% in FY22),

2. steady automotive demand, which should support supply chain division, and

3. accruing benefits from the traction in multi-modal logistics. The company has an extensive fleet of more than 10,000 trucks, six cargo ships, and 14 million square feet of warehouse space.

4. TCI placed an order with a Japanese shipyard to buy two new ships of ~7,300 mt each for a consideration of $34 million (Rs 2.7 billion). These vessels are slated for delivery on or before June 2026. TCI currently has six ships with a total capacity of 77,957 mt.

5. TCI’s established infrastructure, long-standing customer relationships, and an experienced management team are anticipated to aid its position as a preferred 3PL partner.

We expect TCI to deliver a revenue/Ebitda/profit after tax compound annual growth rate of 14%/16%/17% over FY23-FY26.

We reiterate our 'Buy' rating on the stock with a target price of Rs 990, based on 15 times FY26E earnings per share.

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