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Transport Corporation of India- Seaways segment drags down profitability…
Transport Corporation of India’s (TCI) Q3FY11 results were below our
estimates, mainly on the back of the poor performance of the seaways
division. Due to dry docking of three ships and requisite expense for the
same, the seaways division reported a loss at the PBIT level of | 1.29
crore. On the whole, the company recorded net sales of | 444.4 crore,
growth of 16.6% YoY and 0.5% QoQ. The EBITDA margin increased 31
bps YoY to 7.5% but decreased 44 bps QoQ. The subsequent PAT stood
at | 11.8 crore, remaining flat YoY and declining 18.4% QoQ.
Highlights of the quarter
ƒ During Q3FY11, the poor performance of the seaways division
adversely impacted the performance of TCI. In Q3FY11, revenues
from the seaways division increased 7.2% YoY but declined 15.4%
QoQ. During the quarter, three ships were sent for dry docking. As a
result, the segment reported loss at the PBIT level of | 1.29 crore
ƒ During the quarter, revenues from the freight division increased
10.7% YoY while revenues from XPS and supply chain solution
(SCS) divisions increased 13.8% YoY and 43.4% YoY, respectively
Valuation
The Q3FY11 performance was impacted by the poor performance of the
seaways division. However, going forward, with increasing contribution
from high margin businesses like XPS and supply chain, improving
volumes from the automobile industry and continual and sustainable
margin expansion, we believe TCI will register growth of 15.6% and
16.8% CAGR in topline and bottomline, respectively, during FY10-FY12E.
At the CMP of | 108, the stock is trading at 15.1x its FY11E EPS of | 7.1
and 13.4x its FY12E EPS of | 8.1. We have valued the stock at 15x FY12E
EPS and arrived at a target price of | 121 per share.
ƒ In Q3FY11, the freight division registered topline growth of 10.7%
YoY and 3.9% QoQ. PBIT margins increased sharply by 120 bps YoY
and 80 bps QoQ to 4.75%
ƒ The XPS division registered topline growth of 13.8% YoY but
declined 1.0% QoQ. The PBIT margin at 8.1% improved by 40 bps
YoY and 50 bps QoQ
ƒ During Q3FY11, revenues of the SCS division increased 43.4% YoY
and 1.6% QoQ. The PBIT margin at 7.1% improved by 100 bps YoY
but declined by 80 bps QoQ.
ƒ For nine months ended December 2010, the company has incurred
capex to the tune of | 60 crore of which | 40 crore was utilised for
buying trucks
ƒThe demerged entity, TCI Developers, is expected to be listed on
exchanges within the next month
Valuation
The performance in Q3FY11 was impacted by the poor performance of
the seaways division. However, going forward, with increasing
contribution from high margin businesses like XPS and supply chain,
improving volumes from the automobile industry and continual and
sustainable margin expansion, we believe TCI will register growth of
15.6% and 16.8% CAGR in topline and bottomline, respectively, during
FY10-FY12E. At the current price of | 108, the stock is trading at 15.1x its
FY11E EPS of | 7.1 and 13.4x its FY12E EPS of | 8.1. We have valued the
stock at 15x FY12E EPS and arrived at a target price of | 121 per share.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Transport Corporation of India- Seaways segment drags down profitability…
Transport Corporation of India’s (TCI) Q3FY11 results were below our
estimates, mainly on the back of the poor performance of the seaways
division. Due to dry docking of three ships and requisite expense for the
same, the seaways division reported a loss at the PBIT level of | 1.29
crore. On the whole, the company recorded net sales of | 444.4 crore,
growth of 16.6% YoY and 0.5% QoQ. The EBITDA margin increased 31
bps YoY to 7.5% but decreased 44 bps QoQ. The subsequent PAT stood
at | 11.8 crore, remaining flat YoY and declining 18.4% QoQ.
Highlights of the quarter
ƒ During Q3FY11, the poor performance of the seaways division
adversely impacted the performance of TCI. In Q3FY11, revenues
from the seaways division increased 7.2% YoY but declined 15.4%
QoQ. During the quarter, three ships were sent for dry docking. As a
result, the segment reported loss at the PBIT level of | 1.29 crore
ƒ During the quarter, revenues from the freight division increased
10.7% YoY while revenues from XPS and supply chain solution
(SCS) divisions increased 13.8% YoY and 43.4% YoY, respectively
Valuation
The Q3FY11 performance was impacted by the poor performance of the
seaways division. However, going forward, with increasing contribution
from high margin businesses like XPS and supply chain, improving
volumes from the automobile industry and continual and sustainable
margin expansion, we believe TCI will register growth of 15.6% and
16.8% CAGR in topline and bottomline, respectively, during FY10-FY12E.
At the CMP of | 108, the stock is trading at 15.1x its FY11E EPS of | 7.1
and 13.4x its FY12E EPS of | 8.1. We have valued the stock at 15x FY12E
EPS and arrived at a target price of | 121 per share.
ƒ In Q3FY11, the freight division registered topline growth of 10.7%
YoY and 3.9% QoQ. PBIT margins increased sharply by 120 bps YoY
and 80 bps QoQ to 4.75%
ƒ The XPS division registered topline growth of 13.8% YoY but
declined 1.0% QoQ. The PBIT margin at 8.1% improved by 40 bps
YoY and 50 bps QoQ
ƒ During Q3FY11, revenues of the SCS division increased 43.4% YoY
and 1.6% QoQ. The PBIT margin at 7.1% improved by 100 bps YoY
but declined by 80 bps QoQ.
ƒ For nine months ended December 2010, the company has incurred
capex to the tune of | 60 crore of which | 40 crore was utilised for
buying trucks
ƒThe demerged entity, TCI Developers, is expected to be listed on
exchanges within the next month
Valuation
The performance in Q3FY11 was impacted by the poor performance of
the seaways division. However, going forward, with increasing
contribution from high margin businesses like XPS and supply chain,
improving volumes from the automobile industry and continual and
sustainable margin expansion, we believe TCI will register growth of
15.6% and 16.8% CAGR in topline and bottomline, respectively, during
FY10-FY12E. At the current price of | 108, the stock is trading at 15.1x its
FY11E EPS of | 7.1 and 13.4x its FY12E EPS of | 8.1. We have valued the
stock at 15x FY12E EPS and arrived at a target price of | 121 per share.
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