Transport Corporation of India (TCI) in the first quarter of 2023 has showcased the resilience of its supply chain business. The company has seen a notable 5.8% increase in first-quarter profit, on the back of robust demand in its supply chain segment that offset higher freight costs. In the quarter ending June 30, TCI’s consolidated net profit rose to 823 million rupees (USD 10 million).
The company has seen a substantial growth in its supply chain business, driven by the recovery in demand from the automotive sector, which contributes about 80% of the division’s revenue. However, increased operational costs and higher retail fuel prices resulted in elevated freight rates during April to June, leading to elevated expenses for fleet operators. The freight division constitutes approximately half of the company’s net sales.
TCI when, compared to it’s peers have shown a favourable valuation metrics during the June quarter, when logistics companies were impacted by slowed demand in the e-commerce segment. While, Blue Dart Express reported a drop in profit and Mahindra Logistics posted a loss, TCI stood at a price-to-earnings ratio (PE) of 16.08 and an enterprise value-to-earnings before interest and taxes (EV/EBIT) ratio of 11.48.
Going ahead, the company’s 12 months revenue and profit growth also looks promising, with a positive sentiment from analysts.
In contrast, Blue Dart Express has a higher valuation with a PE of 36.75 and an EV/EBIT ratio of 15.85, while Mahindra Logistics’ PE stands at 41.52 and EV/EBIT at 9.29. Both companies have faced challenges in terms of profitability and growth.