TCI Express soars 13% on heavy volumes, hits new high on strong Q2 results

The share price of the logistics firm has rallied 25 per cent after ICRA reaffirmed ratings of the company's commercial paper and a strong Q2FY22 earnings

Shares of TCI Express hit a new high of Rs 1,853.95, soaring 13 per cent on the BSE in Tuesday’s intra-day trade on back of heavy volumes. In the past four weeks, the stock of the logistics company has rallied 25 per cent after the rating agency ICRA reaffirmed ratings of the commercial paper of the company and a strong July-September quarter (Q2FY22) earnings.

At 12:22 pm; TCI Express was trading 13 per cent higher at Rs 1,851 on the BSE, as compared to 0.07 per cent risen in the S&P BSE Sensex. The trading volumes at the counter jumped over three-fold with a combined 555,000 equity shares changing hands on the NSE and BSE.

TCI Express is a leading asset light B2B (95 per cent of revenues) express logistics company with 28 sorting centres, 800+ owned pan-India centres covering 40000 pick-up and delivery points.

For Q2FY22, the company’s revenue grew 28 per cent year-on-year (YoY) to Rs 273 crore. Profit after tax jumped 45 per cent to Rs 34 crore due to strong operating performance. Earnings before interest, tax, depreciation and amortization (ebitda) margin improved 140 basis points to 17.3 per cent from 15.9 per cent due to lower higher utilisation and better cost control measures.

The management said Q2FY22 started on a strong note with robust pick-up in the economic and business activities after subdue first quarter due to the impact of second wave of Covid-19. Strong recovery in demand and supply was visible with the onset of festive season. The growth for the quarter was propelled by strong recovery in business activities of key customer industries and SME’s.

The new initiative taken by the government including ‘PM Gati Shakti National Master Plan’ coupled with strong pick-up in economic activities, ongoing festive season, increasing demand from the rural areas due to longer than expected monsoons, increasing vaccination and declining covid cases, will drive demand in the upcoming quarters, the management said.

According to ICRA, an expectation of a gradual improvement in industrial activity, resulting in better load availability for the company, is likely to help it record a healthy revenue growth in the medium term. Further, a gradual structural shift in preference towards organised fleet operators coupled with the incremental revenues from the company’s two new service offerings, the Cold Chain Express and the C2C Express, are also expected to support its growth prospects over the medium term, the rating agency said in rationale.

Given its asset-light model, the company does not own any fleet and relies on the fleet hired from attached business vendors. This provides the company with the flexibility to manage its fleet requirements during downturns and helps retain its profitability and return indicators. Additionally, the working capital intensity in the business continues to remain at moderate levels, which has helped the company maintain a strong liquidity profile, ICRA said.