Why Did TCI Express Shares Zoom 18% Today?

Shares of logistics company, TCI Express rallied over 18% today after it reported strong earnings for the March quarter (Q4FY21).

Stock of the company surpassed its previous high of Rs 1,144.35 touched earlier this week on Tuesday.

Key Takeaways

For the quarter under review, TCI Express' profit after tax (PAT) surged 124% year-on-year (YoY) to Rs 425 m.

Bottomline more than doubled largely on the back of sharply higher sales, better absorbing fixed costs and cost controls.

The company's revenue from operations grew 17.6% YoY to Rs 2.8 bn, led by 15% growth in volumes to 2.3 lakh tonne and 2.3% growth in realisation to Rs 12.2 per kg.

The company reported strong margin improvement on the back of an increase in both volumes and realisations.

EBITDA margin improved 870 basis points (bps) to 20.3% in Q4FY21 from 11.6 in the year ago period.

Here's a table comparing the company's quarterly performance on key parameters.

TCI Express Financial Performance

(Rs m)	Q4FY21	Q4FY20	Q3FY21	YoY (%)	QoQ (%)
Revenue	2,798	2,379	2,625	17.60%	6.60%
Total expenses	2,281	2,136	2,195	6.80%	3.90%
Profit before tax	547	255	447	114.50%	22.40%
Tax	122	65	111	87.70%	9.90%
Profit after tax	425	190	336	123.70%	26.50%

Data Source: Company Filings

For the full financial year FY21, the company saw revenues falling by nearly 18% on account of impact of the pandemic.

FY21 net profits were 12% higher at Rs 1 bn on the back of stringent cost controls.

The company's board recommended final dividend of 100% i.e., Rs. 2 per equity share for the financial year ended 31 March 2021

The company's management expects the expansion in EBITDA margins to continue, aided mainly by volume growth, as it expects the SME sector to bounce back as the state-wide restrictions due to pandemic subsides.

Commenting on the performance, Managing Director Chander Agarwal said,

• "Q4 FY2021 was the one of the best quarter as the company delivered growth in revenues coupled with significant improvement in margins and profitability. I am particularly pleased to close an otherwise challenging year with a strong quarterly performance.
  
  During the quarter, we saw a recovery in Index of Industrial Production especially in the month of March, where our key servicing industries registered a robust growth on both sequential as well as y-o-y basis thereby driving volumes."

Cash Flow and Free Cash Flow Track Record

Traction in Business Activity & New Offerings

The company said it saw a strong pickup in business activity with e-way bill collections increasing by 28% on a YoY basis and 13% on a sequential basis.

TCI Express has started to provide offerings such as cold chain express for catering to the pharma sector.

It has also started air express division and customer to customer (C2C) express logistics. The company expects traction in these divisions in the coming years.

The company said that it will infuse Rs 1 bn in the next two years to automate its new sorting centers at Gurgaon, Pune and also start building pan-India bigger warehouses.

Equitymaster's View on the Logistics Industry

Here's what Tanushree Banerjee, Co-Head of Research at Equitymaster, and editor of the premium stock recommendation service StockSelect, wrote about the logistics industry in an edition of Profit Hunter.

• But investors are falling head over heels to get a share of the vaccine-led logistics megatrend.
  
  Get this right.
  
  India's need for logistics infrastructure is NOT just about transporting vaccines all over the country.
  
  The vaccination program should be executed within two years, hopefully.
  
  But India will need a modern and solid logistical infrastructure for decades beyond that.
  
  In fact, the farm reforms, even after any amendments, could bring tremendously benefits from good warehousing and logistics.
  
  So, logistics is certainly a Rebirth of India megatrend.
  
  And it is a megatrend that would last decades if India is to become a global supply chain hub.

You can read the entire piece here: Is Snowman Logistics the Poster Boy of India's Vaccine Stocks Megatrend?

How the Stock Markets Reacted to TCI Express' Q4FY21 Numbers Today

TCI Express share price zoomed over 18% today to hit 52-week high today as the company's profit more than doubled.

The stock ended at Rs 1,259, up 16.8%.

TCI Express shares touched a 52-week high of Rs 1,293 today and have a quote of Rs 523 as their 52-week low.

Over the past one year, shares of the company have rallied a whopping 90%.

At the current market price of Rs 1,259, the company commands a market cap of Rs 48.4 bn.

About TCI Express

TCI Express is India's leading time-definite express distributor, based on its unparalleled experience and deep domain expertise that enables it to offer customized solutions to express delivery.

The company has been growing rapidly and expanding its distribution network locally, with its current 800 offices covering more than 40,000 locations.

TCI Express is well-equipped to offer time-definite solutions to 704 out of 712 districts in India with its wide spectrum of services comprising surface, domestic and international air, e-commerce, priority, and reverse express services.

The company has special expertise in enabling solutions for clients in sectors like consumer electronics, retail, apparel &, lifestyle, automobile, pharmaceuticals, engineering, e-commerce, energy/power, and telecommunications.

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