TCI Express Q1 Results Review - Low Volumes Result In Subdued Performance: ICICI Securities

ICICI Securities Report

TCI Express Ltd. Q1 FY25 Ebitda was significantly below our/consensus estimates, mainly on account of underutilised capacity, higher operating cost and unabsorbed fixed cost.

Key points:

1. Volume declined 2.1% YoY on subdued demand.

2. Ebitda margin declined to 11.2% (14.1% in Q4 FY24), lowest since Q1 FY21.

3. Railway business grew ~30% YoY and contributed to 2-2.5% of revenue for Q1 FY25.

4. Incurred capex of Rs 75 million during Q1 FY25 and plans to incur capex of Rs 3.3 billion for FY25-27.

5. Truck utilisation level dipped to 82% in Q1 FY25 (84% in FY24).

While management has maintained its volumes growth guidance, we believe it is difficult for TCI Express to achieve this in the current demand scenario.

Hence, we cut our FY25E/FY26E earning per share by 15%/12%. We list TCI Express as one of the top picks in the logistics space.

Retain Buy; target price revised to Rs 1,300 (from Rs 1,495) based on 34 times FY26E earning per share.

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