ICICI Direct Places A ‘Buy’ On This Logistics Firm For Gains In The Short Term

As we write indices in the previous day's trade ended almost flat and were up for the week with Nifty holding above 15,900 points. While equities are largely for long term, ICICI Direct has suggested a scrip for gains to be made in the short term.

ICICI Direct Places A ‘Buy’ On This Logistics Firm For Gains In The Short Term

Here is the detail on the stock recommendation by ICICI Direct:

ICICI Direct has suggested to buy the scrip of TCI Express at a price of Rs. 1539 for an upside of over 15% i.e. for a target price of Rs. 1775. Also, the brokerage has suggested to place a stop loss of Rs. 1380 for the trade.

Here are the other key points in respect of the stock as viewed by the brokerage:

TCI Express

TCI Express has emerged as one of the leading Indian B2B, surface logistics and express logistics solution providers. The company caters to the five increasingly growing areas across sectors including automotive, pharmaceutical, textiles, engineering, IT hardware and electronics.

The company's offerings include cold chain express for pharma sector , air express division, customer to customer (C2C) express logistics. The company despite the rising competition has been left unscathed owing to its continuing focus on building its strength in the B2B segment by expansive delivery, focus on SME and MSME, investments into building IT infra etc.

Technicals:

The logistic space has seen strong buying demand in the last one year with most stocks breaking above their long term supply area. TCI Express has been an outperformer within the logistic space maintaining higher peak and higher trough in all time frames. It is currently on the cusp of generating a bullish Flag breakout signalling continuance of the primary up trend and offers fresh entry opportunity. We expect the stock to trade with a positive bias and head towards Rs. 1775 levels as it is the 161.8% external retracement of its last five weeks breather (Rs. 1624-1388).

The stock earlier during May 2021 registered a resolute breakout above a rising supply line joining the highs of CY18 (Rs. 739) and CY20 (| 949) signalling a structural turnaround. It has already taken five weeks to retrace just 38.2% of its preceding four week's rally (| 940-1624). A shallow retracement highlights a higher base formation and a robust price structure.

Financials:

 TCI Express continued to post QoQ recovery in profitability in FY21 (EBITDA margin expansion by 410 bps), in spite of lower operating leverage (volumes down 17% in FY21), as the management employed cost control measures, realisation hikes, passage of crude oil price rise to most of the customers and continued to pick only profitable sales, said the brokerage report.

The management expects the expansion in EBITDA margins to continue from hereon (100 bps each year), aided mainly by volume growth, as it expects the SME sector to bounce back, as the state-wide restrictions due to pandemic subsides, added the research report.

 

Market capitalisation	Rs. 5894.9
Total debt FY21	Rs. 1 crore
Cash FY21	Rs. 27.2 crore
52 week high/low	1140/511
Equity capital	Rs. 3.8 crore
Face value	Rs. 2

Disclaimer:

Stock market investments are risky. Please do your analysis considering your risk profile and financial goals before betting on any investment product. Greynium, neither the brokerage nor the author will be responsible for any losses made on any investment call taken basis the above report. The above report is taken from ICICI Direct.

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