Motilal Oswal sounds near-term caution on TCI Express; Here's why

Motilal Oswal retained its 'Neutral' rating on the stock with a target price of ₹730 per share, against Monday's close of 728 apiece.

Analysts at Motilal Oswal have given a near-term caution against TCI Express stock, citing a margin and volumes hit from heightened competition and elevated freight costs.  

 

The brokerage retained its 'Neutral' rating on the stock with a target price of ₹730 per share, against Monday's close of 728 apiece. "We maintain a neutral stance on TCI Express due to ongoing challenges in volume and profitability." 

 

Motilal Oswal said that the company is witnessing weak demand in industrial segments such as manufacturing, automobiles, and textiles, despite the healthy growth of around 22 per cent year-on-year (Y-o-Y)  in e-way bill generation during April-August 2025. The brokerage noted that the weakness reflects intense competition, weighing on business performance and volume growth.

 

 

This growth is expected to accelerate due to a reduction in GST rates for the majority of auto segments, from 28 per cent to 18 per cent, it said. "However, it remains to be seen whether TCIE can convert these positives to volume growth" 

 

The long-term outlook for surface express services remains positive, but near-to medium-term challenges such as rising competition and higher freight costs are expected to pressure margins and volumes, Motilal Oswal said. 

 

Analysts said management expects 8-9 per cent tonnage growth and 11-12 per cent revenue growth in FY26. However, margin improvement targets may be challenged by persistent cost pressures, rising labour expenses, and lower profitability in international air express.

 

The brokerage added that TCI Express has planned ₹280 crore in capital expenditure over FY26-27, focused on sorting centre automation and network expansion, while dependence on higher-margin multimodal segments could pose risks if demand recovery is slower than anticipated.

 

Volume growth remained muted in the financial year 2025 (FY25) and the first quarter of Q1FY26, down 1 per cent Y-o-Y in each period, as SME demand was hit by high inflation and interest rates. Management expects 8-9 per cent tonnage growth and 11-12 per cent revenue growth in FY26, though margin improvement may be constrained by persistent cost pressures, rising labour expenses, and lower margins in international air express.

TCI Express share price history

 

The logistics provider's stock rose as much as 2.55 per cent during the day to ₹746.7 per share, the biggest intraday rise since September 23 this year. The stock pared gains to trade 1.3 per cent higher at ₹737.7 apiece, compared to a 0.02 per cent advance in Nifty 50 as of 10:55 AM. 

 

Shares of the company rose for the second session. The counter has fallen 9.5 per cent this year, compared to a 4.2 per cent advance in the benchmark Nifty 50. TCI Express has a total market capitalisation of ₹2,853.57 crore.