Q3FY2022 results of Transport Corporation of India
Sharekhan has highlighted that “Transport Corporation of India (TCI) reported a strong beat on net earnings for Q3FY2022 led by sustained strong performance in Seaways. The consolidated revenues grew by 3.8% y-o-y to Rs. 838 crore led by freight segment (revenues up 8% y-o-y, pent-up demand and inventory restocking) and seaways (up 46% y-o-y, higher freight rates and high-value return cargo from Myanmar). However, supply chain management, (down 10% y-o-y) underperformed due to continued semiconductor shortages in Auto and lower growth in consumer goods. Consolidated OPM at 13% (up 316bps y-o-y) was higher than the estimate led by seaways (up over 1000bps y-o-y). The strong operational performance led to a 37% y-o-y and 57% y-o-y rise in consolidated operating profit and net profit respectively. The management retained FY2022 guidance.”
Buy for a target price of Rs. 855
The brokerage has claimed that “TCI is expected to benefit from the logistics sector’s growth tailwinds led by GST (business moving towards the organised sector), government thrust on Atma Nirbhar Bharat (PLI incentives to increase domestic manufacturing in turn leading to increased logistics needs), and global supply chain re-alignments (India is expected to be one of the key beneficiaries of China +1 strategy for global manufacturers).”
As per Sharekhan “We expect TCI to be on a long-term growth trajectory, driven by positive sectoral fundamentals and its inherent strengths and capabilities. We retain our Buy rating on the stock with a revised SOTP based target of Rs. 855 factoring upwardly revised estimates and valuation multiples.”
The key risk for the stock is a sustained weak macro-economic and auto industry environment can lead to a downward revision in net earnings, according to the brokerage.
Disclaimer
The stock has been picked from the brokerage report of Sharekhan Ltd. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.
