Network Expansion And Automation Will Unlock Multimodal Opportunities

Key Takeaways

• Expansion into underserved regions and adoption of automation are driving revenue growth, higher efficiency, and improved margins.
  
• Diversified multimodal services and sector tailwinds are strengthening resilience, boosting volumes, and enhancing market share.
  
• Margin pressures, subdued revenue growth, and high capital spending amid rising competition and input costs threaten long-term profitability and market share retention.

Catalysts

Provides express delivery solutions in India and internationally.

• Ongoing network expansion through new branches and large-scale sorting centers, particularly in underserved tier 2/3/4 towns and Central India, is expected to unlock new customer segments and improve last-mile delivery; this supports top-line revenue growth and will allow higher asset utilization, ultimately aiding margin recovery.
  
• Accelerated adoption of automation technologies at new and existing sorting centers, combined with investments in digital tracking and IT upgrades, are set to boost operational efficiency, reduce costs, and lift EBITDA margins and overall earnings quality over the medium term.
  
• Systematic diversification and scaling of multimodal offerings (Rail, Air Domestic and International, C2C), with dedicated teams for each business line, positions TCI Express to capture higher growth verticals, derisk its revenue streams, and structurally increase revenue growth beyond its core Surface Express segment.
  
• Persistent growth in demand for time-bound, reliable logistics from sectors like retail, pharma, automotive, and especially e-commerce is expected to provide volume tailwinds-amplified by the formalization and digitalization of Indian commerce that encourages preference for organized, compliant players, thus benefiting revenue and market share.
  
• Progressive infrastructure investments, including new logistics parks and freight corridors, are leading to improved transit times and reduced operational bottlenecks, which favor companies with established nationwide networks like TCI Express and support both volume growth and better net margins.

TCI Express Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming TCI Express's revenue will grow by 8.4% annually over the next 3 years.
• Analysts assume that profit margins will increase from 6.9% today to 8.1% in 3 years time.
• Analysts expect earnings to reach ₹1.2 billion (and earnings per share of ₹32.4) by about August 2028, up from ₹829.7 million today. However, there is some disagreement amongst the analysts with the more bullish ones expecting earnings as high as ₹1.4 billion.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 34.9x on those 2028 earnings, up from 31.3x today. This future PE is greater than the current PE for the IN Logistics industry at 24.2x.
• Analysts expect the number of shares outstanding to decline by 1.2% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 13.52%, as per the Simply Wall St company report.

TCI Express Future Earnings Per Share Growth

Risks

• Persistent revenue and tonnage softness, with both sequential and year-on-year revenue decline and under-1% volume contraction in Q1 FY26, point to muted demand recovery and possible market share loss, which could pressure long-term top-line growth.
  
• Margin compression in core Surface Express business (from prior 15% levels to current 13%), largely due to inability to fully pass rising costs (labor, tolls) to customers, highlights risks from inflationary input costs outpacing pricing power-potentially impacting net margins and overall earnings quality.
  
• Scaling of multimodal and international air segments is currently dilutive to margin structure, as new branch and network build-outs incur front-loaded costs while revenue and utilization lag, creating the risk that slow ramp-up could sustain lower profitability and drag on consolidated net margins.
  
• Intensifying competition, both from large global logistics providers and from e-commerce/digital specialists, raises the risk that TCI Express's attempts to move into B2C and e-commerce may face lower realizations, higher client acquisition costs, and potential erosion of core B2B market share, negatively impacting revenue and margin expansion.
  
• The heavy, ongoing multi-year CapEx program (~₹500 cr) to drive automation and network enlargement, if not matched by proportional top-line growth, could result in suboptimal asset utilization, operational inefficiency, and ultimately reduced returns on capital employed, thereby depressing long-term earnings and financial resilience.

Valuation

• The analysts have a consensus price target of ₹800.545 for TCI Express based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of ₹1250.0, and the most bearish reporting a price target of just ₹648.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be ₹15.3 billion, earnings will come to ₹1.2 billion, and it would be trading on a PE ratio of 34.9x, assuming you use a discount rate of 13.5%.
  
• Given the current share price of ₹677.05, the analyst price target of ₹800.55 is 15.4% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.