TCI Express Q4 Results Review - Performance In Line; Outlook Bright: Motilal Oswal

• TCI Express (TCIE)’s 4QFY23 revenue grew 9% YoY to ~INR3.3b, in line with our estimate. Improved profitability and growth were primarily driven by higher capacity utilization (of 85%) during the quarter and demand from both Corporate and SME customers.

• EBITDA for the quarter stood at INR541m with margin of 16.6% (in line). PAT stood at INR385m (in line) with margin of 11.8%.

• Volume in 4QFY23 stood at 0.26m tonnes (+9% YoY). For FY23, volume grew ~15% YoY (1.0 m tonnes).

• In FY23, revenue stood at ~INR12.4b (+14.8% YoY), EBITDA margin was 15.7% (-50bp YoY), and PAT stood at INR1.4b (+8% YoY). The company generated CFO of INR1.5b in FY23. Utilization level was 84.25% in FY23 and TCIE aims to maintain 85% level in FY24. The net working capital was 15 days for FY23. Cash conversion ratio in FY23 stood at 73% v/s 70% in FY22.

• The 4QFY23 performance was in line with our estimate. The outlook remains bright and we have kept our estimates largely unchanged. We expect TCIE to clock volume/revenue/EBITDA/PAT CAGR of 11%/13%/19%/18% over FY23- 25, aided by automation and branch network expansion, resulting in improved operating efficiencies. Capex of INR5b is envisaged over FY23-27, towards setting up of own sorting centers and corporate office in Gurugram, Haryana. Reiterate BUY with a TP of INR1,780 (based on 35x FY25E EPS).

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