Brokerage firm Prabhudas Lilladher in its latest initiation report has initiated coverage on logistics player TCI express with a positive ratinng and a target price of Rs 1,430 against the current market price of Rs 1,069 on the NSE. This implies a 33% upside in the stock price of TCI express. The brokerage stated that the industry is poised for a huge growth led by rising GDP & online retail penetration, increasing complexity in supply chains and distribution model, improvement in road infrastructure, and greater adoption of technology.
“The logistics sector is mainly dominated by the movement of goods via roads (~71% of volumes and ~65-70% of transportation revenues). Overall, est. logistics gross spends (~US$435bn) form 13% of GDP, of which direct spend is 51% of the pie,” the brokerage said in a report.
B2B express is one of India’s fastest growing segment (~2x of real GDP growth) with organized-to-unorganized mix of 45:55, the note said. Adding that, improvement in road infrastructure plus other factors are driving conversion of FTL- Full Truck Load freight (biggest segment; cost sensitive) to B2B express volumes (time sensitive). TCI Express is building its capacities for the next decade and an uptick in volumes on expanded asset base (automation of existing assets) will likely maintain return ratios at attractive levels.
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