Transport Corporation of India freight growth supports outlook despite Seaways margin softness

Investment View and Valuation

Motilal Oswal Financial Services Ltd. reviewed Transport Corporation of India’s 1QFY27 results on August 3, 2026. The broker characterised the performance as steady despite headwinds from the West Asia crisis, inflationary pressures and fuel-price volatility.

MOFSL retained its estimates and reiterated its Buy rating, with a target price of Rs 1,150 based on 17 times FY28E EPS. The broker expects future growth to be supported by sustained strength in Seaways, continued Supply Chain expansion and a gradual improvement in Freight margins through a higher less-than-truckload mix and greater adoption of multimodal logistics using new ships and rakes.

1QFY27 Financial Performance

Transport Corporation of India reported consolidated revenue growth of around 10 per cent year-on-year to Rs 12.5 billion in 1QFY27, in line with MOFSL’s estimate. EBITDA increased around 12 per cent year-on-year to Rs 1.35 billion, 5 per cent above the broker’s estimate. EBITDA margin was 10.8 per cent, up 20 basis points year-on-year and flat quarter-on-quarter, compared with MOFSL’s 10.3 per cent expectation. Adjusted PAT was approximately Rs 1.05 billion, broadly flat year-on-year and in line with estimates.

Segment Performance and Operating Trends

Freight

Freight revenue grew around 9 per cent year-on-year in 1QFY27, supported by healthy volume growth and traction in the less-than-truckload business. Freight EBIT margin was 2.2 per cent, down 20 basis points year-on-year.

Supply Chain Solutions

Supply Chain Solutions revenue grew around 10 per cent year-on-year, driven by demand from passenger-vehicle mobility, retail, consumer and quick-commerce customers. Supply Chain EBIT margin was 5.5 per cent, down 10 basis points year-on-year. Management expects fresh automobile inventory replenishment to support Supply Chain growth.

Seaways

Seaways revenue rose around 6 per cent year-on-year, with volumes broadly flat and revenue growth led by pricing. Seaways EBIT margin fell 220 basis points year-on-year to 34.7 per cent as higher bunker prices weighed on profitability.

Management expects Seaways EBITDA margin to remain in the 38-40 per cent range and stated that higher bunker costs are largely passed through to customers. Management expects seasonal moderation in demand during 1Q and 2Q, but does not anticipate a significant demand disruption from price increases. One vessel is scheduled for dry docking in March 2027.

Joint Ventures

Joint ventures delivered steady growth during 1QFY27. TCI-Concor joint-venture revenue increased 8 per cent year-on-year, although volumes handled declined to 38,000 TEUs from 40,000 TEUs in 1QFY26. The Transystem joint venture with Mitsui grew 11.5 per cent year-on-year.

The Cold Chain joint venture grew around 49 per cent year-on-year on customer additions in quick commerce and retail. Capital employed in this business exceeded Rs 1.1 billion.

Guidance, Capex and Forecasts

Management maintained FY27 guidance for consolidated revenue and profit growth of 10-12 per cent. Transport Corporation of India incurred capex of around Rs 3.7 billion in FY26 and plans approximately Rs 6 billion of capex in FY27, including around Rs 2.4 billion for ships.

MOFSL’s FY27E and FY28E estimates were unchanged. The broker projects revenue of Rs 55.8 billion and Rs 63.7 billion, EBITDA of Rs 5.9 billion and Rs 6.8 billion, and adjusted PAT of Rs 4.8 billion and Rs 5.4 billion, respectively. EBITDA margin is projected at 10.6 per cent in both FY27E and FY28E.

Near-Term Factors to Monitor

• Fuel-price volatility and the impact of higher bunker prices on Seaways profitability.
• Flat Seaways volumes and seasonal demand moderation during 1Q and 2Q.
• The scheduled dry docking of one vessel in March 2027.
• The pace of fresh automobile inventory replenishment supporting Supply Chain growth.
• Freight margin improvement through a higher less-than-truckload mix and greater adoption of multimodal logistics using new ships and rakes.