Analysts at Motilal Oswal expect the growth momentum to continue in transport sector stocks due to a pick up in economic activity, normalization in transportation and government reforms that will benefit organized players in the sector.
They gave a buy rating on the shares of Transport Corporation of India (TCI), on 6th April 2022 with a target price of ₹880 per share which translates to a potential upside of 26.17% as compared to the current price levels of ₹ 697.45 apiece. The shares have rallied 171.86% in the past year.
The Transport Corporation of India has developed robust capabilities in multimodal Logistics via its presence across major transportation modes and has diversified its offerings from road freight, integrated Supply Chain solutions, and sea freight, to a joint venture with CONCOR for rail freight.
The company announced a Capex plan of ₹5.6 billion to purchase 1600 trucks spread over the next 12-18 months. This capital expenditure is aimed at replacing its older fleet and capturing the pick-up in demand in the LTL segment. The expenditure will be funded by internal accruals and debt.
Motilal Oswal believes that VRL would comfortably manage the Capex funding and has suggested a buy rating with a target price of ₹665.
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