Why is TCI Express Ltd falling/rising?

Recent Price Movement and Market Performance

TCI Express has experienced a notable downward trend in recent sessions, with the stock falling for two consecutive days and losing 5.51% over this period. Intraday trading saw the share price touch a low of ₹503.1, representing a 5.7% decline from previous levels. The weighted average price indicates that a larger volume of shares exchanged hands closer to this lower price point, signalling selling pressure. Furthermore, the stock is trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, underscoring a bearish technical outlook.

Investor participation has also waned, with delivery volumes on 30 January dropping by 65.52% compared to the five-day average, suggesting reduced confidence among shareholders. Despite this, liquidity remains sufficient for modest trade sizes, with daily traded value supporting transactions up to ₹0.02 crore without significant market impact.

Long-Term Underperformance Against Benchmarks

Over the past year, TCI Express has delivered a negative return of 34.65%, starkly contrasting with the Sensex’s positive 5.37% gain during the same period. This underperformance extends over longer horizons, with the stock declining by 64.83% over three years and 43.81% over five years, while the Sensex has appreciated by 36.26% and 64.00% respectively. Such persistent lagging against the benchmark index highlights structural challenges within the company and investor scepticism about its growth prospects.

Financial Performance and Valuation Concerns

Despite a low debt-to-equity ratio averaging zero, which typically signals financial prudence, the company’s profitability metrics have deteriorated. Return on equity stands at 10.2%, and the stock trades at a price-to-book value of 2.4, indicating a valuation discount relative to peers’ historical averages. However, this valuation advantage is overshadowed by a 22.7% decline in profits over the past year, reflecting operational difficulties.

Net sales growth has been modest at an annual rate of 8.21% over the last five years, while operating profit growth has been even more subdued at 3.22%. The company has reported negative results for eight consecutive quarters, with operating cash flow for the year at a low ₹117.52 crore. Profit after tax for the nine-month period stands at ₹62.74 crore, having contracted by 20.40%, and profit before tax excluding other income has fallen by 10.96% in the latest quarter. These figures point to weakening earnings quality and margin pressures.

Investor Sentiment and Shareholding

Promoters remain the majority shareholders, yet the stock’s consistent underperformance and declining financial health have likely dampened investor enthusiasm. The stock’s recent underperformance relative to its sector by 4.54% today further emphasises the challenges it faces in regaining market confidence.

Conclusion: Why the Stock is Falling

The decline in TCI Express Ltd’s share price on 02-Feb is a reflection of its prolonged underperformance against market benchmarks, deteriorating profitability, and subdued growth prospects. Despite a sound balance sheet with negligible debt, the company’s inability to generate consistent profits and its negative results over multiple quarters have eroded investor confidence. Technical indicators and reduced trading volumes further compound the bearish sentiment. Until the company demonstrates a turnaround in earnings and growth trajectory, the stock is likely to remain under pressure.

Limited Time Only! Subscribe for Rs. 12,999 and get 1 Year of MojoOne + an Additional Year Completely FREE. Don't miss out on this exclusive offer. Claim Your Free Year →