Transport Corporation of India (TCI) has formed a strategy to cross sell its services through its five divisions. Each division would cross market services and provide single point logistics solutions to its clients. This is expected to increase business for TCI, going ahead. Based on its JV experience with Mitsui (Transystem Logistics International), TCI has been able to replicate the model and deliver efficient supply chain solutions (SCS) to industries like FMCG, retail and automobiles. SCS is expected to grow at 30-35 per cent and the segment’s profitability is better than the overall business. TCI plans to increase its warehouse space from 8 MSF currently to 10 MSF by March 2011. About 15 per cent of the warehouse space is owned by TCI and rest is leased. In the real estate business, it is looking at jointly developing properties (at Delhi, Chennai, Bangalore, etc) for construction of residential and commercial space.
The implementation of GST could also bring in additional business through higher outsourcing of logistics activities to the third party logistics players like TCI. At Rs 90, the stock is trading at 1.7 times book value, 12.8 times earnings and 7.3 times cash earnings based on 2010-11 estimated numbers earnings. Maintain ‘accumulate’.
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