This stock has doubled investor wealth since January; HDFC Securities says buy to gain up to 25%

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Published: November 28, 2017 6:00:35 PM

In its latest report, HDFC Securities has come out with a buy rating on the shares of this smallcap stock which has more than doubled investor wealth since January.

Transport Corporation of India shares have risen by more than 106% since January. (Image: Reuters)

HDFC Securities has a buy rating on the shares of Transport Corporation of India Ltd, which has more than doubled investor wealth since January. Notably, Transport Corporation of India shares have risen by more than 106% in the year. In its research report, HDFC Securities says that the company is set to gain from the improving scenario in the logistics sector. “With the advent of GST, the focus of large corporates is expected to shift from tax benefiting logistic solutions to cost benefiting logistic solutions. We feel investors could buy the stock at the CMP (17x FY19E EPS) and add on dips to Rs.262 – 265 (15x FY19E EPS) for sequential targets of Rs.334 (~19x FY19E EPS) and Rs.387 (~22x FY19E EPS) over the next 3-4 quarters,” HDFC Securities said in its report.

Track live stock price: Transport Corporation of India

Transport Corporation of India shares closed at Rs 309 on Tuesday afternoon on NSE. HDFC Securities target price implies an upside of more than 25% from the current market prices. The research firm notes that a slew of benefits will flow from the implementation of GST for the company.

“Implementation of Goods & Services Tax (GST) will be a game changing event for businesses in general and organized logistics players in specific. Expert estimates suggest that GST implementation can reduce the overall logistics cost by around 30-40 per cent, thereby leading to an overall saving of about 0.3-0.4 per cent of GDP. It would provide a boost to warehousing, supply chain management and third party logistic players (3PL) business. It will enable the creation of the common market and permit free and unimpeded movement of goods & services across the country,” noted the research and brokerage firm in its report.

Apart from just capital appreciation, the company has also rewarded the shareholders with consistent dividend payments. “Company has been a consistent dividend payer which could continue with healthy cash flows lined up for the company in the coming fiscals. On demerger of TCI XPS business, company witnessed a fall in its margin levels as TCI XPS was a high margin accretion business. However, the margins have been on an uptrend since then and are expected to rise with increasing share of seaways & SCS businesses,” HDFC Securities noted in its research report.

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