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Stock To Buy: Motilal Oswal Sees 27% Return In This Multibagger Logistics Stock, Suggests Investment
Brokerage firm Motilal Oswal remains bullish on Logistics sector stock, Transport Corporation of India and assigned buy call with a target price of Rs 810 apiece. Buy Transport Corporation at the current market price of Rs 638 apiece to get 27% return.
The analyst said, TRPC's established presence across the multimodal Logistics value chain (Road, Rail, 3PL, and Water logistics) enables it to offer efficient end-to-end Logistics solutions, cater to a larger addressable market, and makes it the preferred choice for customers looking for complete solutions. Check key takeaways below:
1. Transport Corporation Stock Outlook
The current market price of the stock is Rs 638 apiece with an intraday decline of 0.72%. The stock's 52-week high is quoted at Rs 858 apiece and 52-week low is quoted at Rs 528 apiece.
The small cap stock has given multibagger returns over the years with 5-years return at 117% and 3-years return at 133%. The shares have fallen 9% in last 1-year and 17% in last 1-month. It has a market capitalisation of Rs 4,946.65 crore.
2. Transport Corporation Freight Service Business
TRPC's Freight Services business is likely to benefit from the shift to organized from the unorganized sector. The Freight segment will also benefit from the growing contribution from Less than Truck Load (LTL) services.
It expects the share of LTL to rise to 40% by FY25 (v/s 35% in 1HFY23). The Organized FTL/LTL market is expected to grow at 40%/~34% CAGR over FY20-26E. In the Supply Chain business, TRPC provides technology-driven inbound and outbound transportation, warehousing, and yard management solutions.
The growth momentum in the Seaways segment, which is the highest margin garnering segment for TRPC, is expected to continue in FY23 and FY24.
3. Transport Corporation Valuation
We maintain our positive stance on TRPC as it is expected to benefit from: a) strong Automotive demand, coupled with the addition of new clientele, driving 3PL growth, b) sustained thrust on demand for coastal shipping, c) traction in multimodal Logistics and, d) increasing contribution of LTL in the Freight segment, which will be margin-accretive.
According to the analyst, "We expect revenue/EBITDA/PAT growth of 18%/13%/13% over FY22-24, factoring in an increasing share of LTL in the overall Freight revenue, new clientele in 3PL, and sustained trust for coastal shipping. We maintain our Buy rating with a TP of INR810 (17x FY24E EPS).
Disclaimer
The stock has been picked from the brokerage report of Motilal Oswal. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.
