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smartcat
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Quote smartcat Replybullet Topic: Transport Corp - India's UPS?
    Posted: 20/Nov/2007 at 6:40pm
Transport Corporation of India (CMP: Rs. 143) is another company whose business I like, but wouldn't invest in right now because of various reasons. TCIL is the current favorite of RD too. TCIL seems to be the only company in India that offers entire range of logistics solutions -
 
- Door to door courier and package services
- Land, sea, rail and air transport
- Warehousing and cold chain services
- Offers supply chain mgmt solutions to automobile, FMCG, retail cos
 
PROS:
 
- Complete logistics company
- Increasing sales every year since 2000. Reported net sales of Rs. 1,100 crores in FY07.
- Moves 1.5% of India's GDP by goods value. Owns or operates 7000 trucks.
- Will piggyback on growth in retail and agriculture sector
- Massive expansion plans. Eg: It will increase warehousing capacity from 1m sq ft to 7.5m sq ft within the next few years.
- Shipping services will provide higher 20% plus margins
 
CONS -
 
- Terrible margins. NPM in FY07 was 2.7%
- Over the next few years, it might grow its EPS at only 20 - 25%. It is currently trading at a P/E of 35 plus.
- Highly competitive industry
- Bigger retail companies like Future Group and RIL are setting up their own logistics arms, rather than depend on third-party providers like TCIL.
- Risk of government regulation in courier (door-to-door) business.
 
Though it might not make sense to invest in this company right now, one needs to keep an eye on it. TCIL could become big.
 
 
 


Edited by smartcat - 20/Nov/2007 at 6:53pm
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Quote smartcat Replybullet Posted: 30/Nov/2007 at 4:19pm
ValueResearchOnline.com has started analyzing stocks too!
 
 
TCI has transformed its business model over the years to focus on high-margin businesses like supply chain, express cargo and shipping. Its six business segments ensure that it has a presence across the entire logistics value chain: transportation (including conventional trucking), express (cargo and courier), supply chain solutions (SCS), coastal shipping, windmills and trading (fuel stations).
 
TCI has lined up an aggressive Rs 340 crore capex to scale up its business in order to meet increased demand. It plans to increase its warehousing space, buy new trucks, invest in cold chains, and boost its ship fleet strength over the next three years.
 
At the current price, the stock is trading at 22.8x its FY08E EPS and 16.2x its FY09E EPS. We expect revenues to grow at a CAGR of 19 per cent from Rs 1,085 crore (FY07) to Rs 1,531 crore (FY09E) while net profit is expected to grow at a CAGR of 34 per cent from Rs 31 crore to Rs 55 crore during the same time frame. 
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Quote sureshbazi Replybullet Posted: 02/Oct/2008 at 7:33pm

TCI has some real estate also as additional value.

 

http://propertybytes.indiaproperty.com/?p=2180

 

Logistics and GDP is related. As India has good GDP growth, logistics should do well and TCI is a pure logistics play in the sector should do well.

 

 
'It is only when you combine sound intellect with emotional discipline that you get rational behavior.' – WB.
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Quote basant Replybullet Posted: 02/Oct/2008 at 7:58pm
No moat, unknown promoters, dependence on crude as an input all indicate that it is not a business which would fetch a high multiple.
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Quote Vivek Sukhani Replybullet Posted: 02/Oct/2008 at 8:54pm
But it was fetching a multiple of 35+ a year back only......35+ is not small, in my opinion.
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Quote basant Replybullet Posted: 02/Oct/2008 at 9:34pm
That was crazy. These businesses should not be worth more then 8-10 times earnings.
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Quote Vivek Sukhani Replybullet Posted: 02/Oct/2008 at 9:38pm
But TCI has a very big fleet.......I think that needs to be discounted properly.
Its an old hand in this business. However, players in this industry are not the likes which will give you that sense of comfort to continue holding them at all points of time. I think a concor shll be a much better play.....what do you say?
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Quote basant Replybullet Posted: 02/Oct/2008 at 10:10pm
That big fleet gets deperaciated very fast it is a highly capex model with heavy depreciation and maintenence charges.
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