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TCI Express’s highest ever quarterly Ebitda margin takes the stock to new highs

TCI maintains that volumes were driven by SME customers as there was a strong pick-up in production and demand during the quarter.Premium
TCI maintains that volumes were driven by SME customers as there was a strong pick-up in production and demand during the quarter.

  • TCI’s shares have appreciated meaningfully in the past few months, suggesting investors are factoring in a good portion of optimism into the price. Including Thursday’s gains, the stock has risen around 30% so far this calendar year

MUMBAI: Shares of TCI Express Ltd jumped more than 10% on Thursday in early deals on the National Stock Exchange. The express distributor HAD announced strong March quarter earnings at the fag end of trading hours on Wednesday.

TCI’s earnings before interest, tax, depreciation and amortization (Ebitda) last quarter more than doubled on a year-on-year basis to Rs54.4 crore. This translates into an Ebitda margin of 19.4%, representing an expansion of 820 basis points vis-à-vis the same period last year. One basis point is one-hundredth of a percentage point.

ICICI Direct Research analysts point out that last quarter’s Ebitda margin is the highest ever reported by TCI. Margin performance was driven by better volumes and realisations. Further, in the light of increasing fuel prices, the company was able to pass select costs to customers.

TCI maintains that volumes were driven by SME customers as there was a strong pick-up in production and demand during the quarter. Commenting on the results, Chander Agarwal, managing director, TCI Express said, “We also saw a strong pickup in business activity with e-way bill collections increasing by 28% on y-o-y and 13% on q-o-q basis." For the March quarter, revenues increased by almost 18% year-on-year to almost Rs280 crore.

“We have revised our FY22 and FY23 estimates to factor in the strong Q4 performance and improved outlook on profitability," said analysts from YES Securities Ltd in a report on 19 May. “The asset light nature of business and healthy balance sheet would allow the company to capitalize on the expected improvement in business activity," the brokerage firm added.

According to ICICI Direct, “Rising competitiveness in the sector has left TCI Express unscathed, primarily due to the company’s relentless focus on building its moat in the B2B segment by having owned branch offices, delivery to 40000 locations, focus on MSME and SME clients, continued investments in building IT networks etc, which helps the company in having control over user experience and providing value added services to clients."

To be sure, TCI’s shares have appreciated meaningfully in the past few months, suggesting investors are factoring in a good portion of optimism into the price. Including Thursday’s gains, the stock has risen around 30% so far this calendar year.

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