Transport Corporation of India (TCI) reported a notable 5.8% increase in first-quarter profit on Monday, attributed to robust demand in its supply chain segment that offset higher freight costs. The company’s consolidated net profit rose to 823 million rupees (USD 10 million) for the quarter ending June 30.
TCI’s supply chain solutions business has experienced substantial growth, primarily driven by the recovery in demand from the automotive sector, which contributes about 80% of the division’s revenue. However, freight rates were elevated during April to June due to increased operational costs and higher retail fuel prices, leading to elevated expenses for fleet operators. The freight division constitutes approximately half of the company’s net sales.
During the June quarter, logistics companies were impacted by slowed demand in the e-commerce segment. Blue Dart Express reported a drop in profit, while Mahindra Logistics posted a loss.
Comparing TCI to its peers, the company exhibits favorable valuation metrics, with 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. The revenue and profit growth forecasts for the next 12 months also look 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.
Overall, TCI’s performance in the first quarter showcases the resilience of its supply chain business and highlights the impact of varying demand conditions across different segments of the logistics industry.
