TCI Express: Target Price Set at Rs 575 by Prabhudas Lilladher

TCI Express: Brokerage Firm Cuts EPS Estimates Amid Inflation and Competition

Prabhudas Lilladher, a renowned brokerage firm, has released a research report on TCI Express, highlighting a revision in earnings per share (EPS) estimates for the company. The firm has reduced its EPS estimates by 15% and 17% for fiscal years 2027 and 2028, respectively, reflecting adjustments in volume growth forecasts and EBITDA margin assumptions due to ongoing inflation and heightened competition.

According to the report, TCI Express's operational performance remained largely in line with Prabhudas Lilladher's estimates, with an EBITDA margin of 9.6% (as per the firm's estimate of 10.2%). However, the company's profit after tax (PAT) fell short of expectations due to increased depreciation and interest charges. This discrepancy is attributed to the shift of two sorting centers to long-term leases, resulting in the capitalization of rental costs as per the Indian Accounting Standard (IND-AS) 116.

Despite the shortfall, the report notes that the growth momentum evident in the previous quarter has continued, with volumes increasing by 4.7% year-over-year to 267,000 metric tons. This growth is driven by the stable performance in the surface express business and improved traction in the multi-modal segment. Going forward, Prabhudas Lilladher expects a volume compound annual growth rate (CAGR) of 5% over the next two years, accompanied by EBITDA margins of 11.1% and 12.1% in fiscal years 2027 and 2028, respectively.

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The stock of TCI Express currently trades at 20x and 16x the firm's estimated EPS for fiscal years 2027 and 2028, respectively. In light of this, Prabhudas Lilladher maintains a "BUY" rating for the stock, with a target price of INR575 (19x FY28E EPS).