ICICI Direct is bullish on TCI Express has recommended buy rating on the stock with a target price of Rs 780 in its research report dated November 06, 2018.
ICICI Direct's research report on TCI Express
Revenues grew 21% YoY to Rs 247 crore, in line with I-direct estimate of Rs 244 crore EBITDA margins increased 135 bps to 11% mainly due to lower than estimated operating expense to sales ratio (74.1% vs. 75.2% in Q2FY18). Robust revenue growth coupled with margin expansion resulted in absolute EBITDA growth of 38% YoY to Rs 27 crore Reported PAT grew 25% YoY to Rs 16 crore, in line with I-direct estimate as a strong operational performance was offset by higher tax rate (36% vs. estimated 30%).
Outlook
We value TCIEL at 32x P/E on an estimated EPS of Rs 24.4/share (FY20E) with a target price of Rs 780, with BUY recommendation. Key risks to our upside remains 1) Liquidity headwinds for SME sector (50% of TCI Express revenues), 2) rising competitive intensity (private equity funded players entering B2B space).
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