Stock Data:
| Ticker | TCI |
| Exchange | BSE and NSE |
| Industry | Logistics |
Price Performance:
| Last 5 days | +1.77% |
| YTD | -0.81% |
| Last 12 months | 60.06% |
Why is the stock price rising?
A steep growth in the quarterly results led to the overall rise of the stock price – The company reported the highest ever revenue of INR 903 crores which soared by ~30% compared to the same quarter the previous year. The net profit further grew by ~66% to INR 78 crores from INR 47 Crores over the same period. This led to the growth in stock price by nearly 1.4% after the announcement of its results. Though Impact of high fuel prices, general inflation and volatile demand in certain sectors were key challenges for the company but in the medium to long run when the global economy will stabilize and the fuel prices would curb down, TCI will be able to improvise its bottom line significantly. The company is expected to deliver impressive results from the third quarter of the current fiscal year and hence the market is bullish about the stock.
Management Commentary:
“The company continued to demonstrate steady performance due to its adherence to core business fundamentals. Impact of high fuel prices, general inflation and volatile demand in certain sectors were key challenges which the company maneuvered to deliver value to its customers. The emphasis on providing seamless coastal services and rail logistics via a multimodal network has got further traction with customers off-setting their carbon emissions besides managing their cost.”
Vineet Agarwal, CEO and Managing Director
Competitive advantage:
It has a price escalation clause with most of its customers which allows them to pass on fuel price hike. TCI uses its own and hired trucks for road transportation, while it has a Joint venture with Container Corporation of India (ConCor) for rail freight, thereby ensuring efficient cargo movement. Due to its established network of warehouses, fleet operations and branch network, the company is one of the chief beneficiaries of the booming E-commerce industry. Also in Logistics end-to-end delivery service providers wins the game and with its multimodal logistics solutions, effective pricing, TCI wins the game over its competitors.
About Transport Corporation of India Ltd:
Headquartered in Gurugram, Haryana, Transport Corporation of India is a leading provider of integrated multimodal logistics and supply chain solutions. The company has over six decades of experience and moves nearly 2.5% of India’s GDP by value. The company has an extensive network of company owned offices, 13 mn. sq. ft. of warehousing space and a strong team of trained employees. With its customer-centric approach, world class resources, state-of-the-art technology and professional management, the group follows strong corporate governance and is committed to value creation for its stakeholders and social responsibilities. TCI was the first to launch several solutions in the logistics field.
| Investors (in %) | June 21 | Sept 21 | Dec 21 | Mar 22 | June 22 |
| Consolidated Promoter Stake | 66.71 | 66.54 | 66.54 | 66.57 | 66.57 |
| FIIs | 2.42 | 2.08 | 2.31 | 2.66 | 3.11 |
| DIIs | 12.40 | 12.68 | 12.62 | 12.25 | 12.04 |
| Public | 18.48 | 18.70 | 18.53 | 18.52 | 18.28 |
Market Leadership:
With more than six decades of operations, a fleet of approximately 12,000+ trucks and trailers managed on a daily basis, and a widespread distribution network, TCI has cemented its position as a leading player in the logistics industry over the years across multiple segments. This gives them a competitive advantage over other players. Not only this but the company has been awarded as the “Best Warehouse Service Provider” and “Best Cold Chain Service Provider” in 2021.
International Presence:
TCIL has a strong presence in SAARC, especially in BBIN countries (Bangladesh, Bhutan, India and Nepal). It provides services to Bangladesh, Bhutan, Nepal, Sri Lanka, and Pakistan, also connecting Myanmar, with offices at borders and capital cities.
Joint Ventures:
TCI has several subsidiaries, key among them being TCI-CONCOR Multimodal Solutions Pvt. Ltd. (49% shareholding with CONCOR; offers multi-modal rail-road container services) and TCI Cold Chain Solutions Limited (20% shareholding with Mitsui & Co. Ltd., Japan; integrated cold chain services to meet temperature-controlled warehousing and distribution services). Additionally, it has a joint venture with Mitsui & Co., Japan (holding 51% stake), Transystem Logistics International Pvt. Ltd. (logistical partner for Toyota Kirloskar and other Japanese companies).
Growth factor:
TCI’s multimodal solutions cater to the needs of a diversified customer base and help it to capture a higher wallet share of its customers. The company’s focus on margin improvement by controlled cost structure and higher value added services coupled with strong balance sheet and cash flows together with improvement in margins and higher asset turnover, are expected to push return ratios to 18-20% in the years ahead.
Further TCI is very well poised to grow with its multimodal logistics services in the given sector:
| Sector | Chemical + Pharma | Agri | Renewables | Cold Chain | SAARC |
| Growth Factor | 1. Supply chain disruption in China& Europe. 2. Chemicals flow into Pharma through APIs. 3. India is preferred manufacturing destinations for chemicals (all MNCs are present here). 4. Maturing Specialty Chemicals | 1. 16% of GDP in farm & food sector 2. Consumption linked sector with shorter cycles | 1. Global Renewable energy market projected to reach $1,977.6 billion by2030 2. Boom in “green” energy 3. Increased shift from fossil fuels to renewable energy | 1. Growth in the organized food delivery and e-commerce segments. 2. Market maturing to quality vs cost | 1. BBIN & CMLV countries. 2. Increasing Specialty Chemicals linkages in neighboring countries 3. Look East Policy with Govt investment into projects |
| TCI’s approach | 1. Multimodal solution for Movement of Hazardous and Non-Hazardous bulk liquid and dry chemicals. 2. Own strategic assets- ISO Tanks, Gas Tankers, Dry Bulk Containers. 3. Responsible Care, ITCO, PESO and Drugs License 4. Chemical & GDP compliant warehouses. | 1. Multimodal solutions comprising last mile deliveries. 2. 3PL Solutions, Yard management, OBL,WH 3. Offers hub-spoke solutions | 1. End-to-End multimodal through Rail. 2. Import clearance and Warehousing 3. Last Mile and Storage | 1. Dedicated team under JV with Mitsui 2. Quality operations with ` cold & dry solutions 3. 150 +fleet (90 Own),13000+ Pallet position. | 1. Own Subsidiaries in Nepal and Bangladesh. 2. Offices at all major borders and capital cities 3. End-to-End multimodal through Road and Rail. 4. AEO, IATA, CHA, Courier Licenses. |
Going forward, there is significant opportunities for players like TCI as retail market is shifting to online, while the pandemic has accelerated this momentum. With increasing vaccine coverage, strong revival in the economy boosted by higher government spending and E-commerce is expected to drive revenue growth.
Our View:
TCI’s robust pipeline of customers and diversified services have helped the momentum in revenues and margins to continue amid a volatile environment. We continue to see TCI as a long-term play, backed by a diversified clientele, improving share in the LTL business in the Road Freight division and elevated contribution from the high-margin Seaways segment. Due to continued strong margin performance, technology driven capabilities, providing customized solutions in warehousing, multimodal logistics services, supply chain management and expected recovery of the SCM segment in the medium term, we expect profitability to grow by 27% CAGR over FY21-24E. Hence, it is worthwhile to add TCI in your portfolio for a period of 3-5 years.