Why is Total Transport falling/rising?

Strong Quarterly Results Drive Investor Confidence

Total Transport’s recent price surge is underpinned by its impressive financial results over the last four consecutive quarters. The company reported a profit after tax (PAT) of ₹10.99 crores for the nine-month period, marking an extraordinary growth rate of 2,542.22%. Similarly, profit before tax excluding other income for the quarter stood at ₹2.90 crores, growing by 514.29%. These figures highlight a remarkable turnaround in profitability, signalling operational efficiency and effective cost management.

Moreover, the company’s return on capital employed (ROCE) reached a high of 15.19% in the half-year period, with an overall ROCE of 16.1%, indicating strong capital utilisation. This level of profitability is particularly attractive given the company’s low debt burden, with a Debt to EBITDA ratio of just 1.41 times, suggesting a solid ability to service debt and maintain financial stability.

Market Performance and Investor Participation

In the short term, Total Transport has outperformed its benchmark indices and sector peers. Over the past week, the stock gained 11.98%, while the Sensex declined by 0.84%. Similarly, the one-month return of 9.18% far exceeded the Sensex’s 0.86% gain. This outperformance is further emphasised by the stock’s rise of 12.1% above its sector today, reflecting strong relative momentum.

Investor interest has notably increased, as evidenced by a delivery volume of 11,700 shares on 02 Dec, which represents a 360.52% rise compared to the five-day average. This surge in trading activity suggests growing confidence among market participants, likely driven by the company’s positive earnings trajectory and attractive valuation.

Technically, the stock is trading above its 5-day, 20-day, 50-day, and 100-day moving averages, signalling short- to medium-term strength. However, it remains below the 200-day moving average, indicating that longer-term trends may still require confirmation.

Valuation and Long-Term Growth Prospects

Despite the recent rally, Total Transport’s valuation remains compelling. The company’s enterprise value to capital employed ratio stands at a modest 1.3, suggesting it is trading at a discount relative to its peers’ historical averages. This undervaluation, combined with a robust operating profit growth rate of 73.73% annually, positions the stock favourably for investors seeking long-term appreciation.

However, it is important to note that the stock’s year-to-date return is slightly negative at -0.46%, and it has underperformed the Sensex over one and three years, with returns of -6.01% and -56.99% respectively. This indicates that while recent momentum is strong, the company has faced challenges in sustaining growth over longer periods. Nonetheless, the substantial profit growth of 1,362% over the past year suggests a potential turnaround in fundamentals that could support future gains.

Shareholding and Liquidity Considerations

The majority of Total Transport’s shares are held by non-institutional investors, which may contribute to increased volatility but also reflects strong retail interest. Liquidity is adequate for trading, with the stock’s turnover supporting sizeable trade sizes without significant price impact, enhancing its attractiveness for active traders and investors alike.

In summary, the sharp rise in Total Transport’s share price on 03-Dec is primarily driven by its exceptional recent profitability, strong operating performance, and increased investor participation. While the stock has underperformed over longer horizons, its current valuation and growth metrics suggest a positive outlook that has resonated with the market, resulting in the notable price appreciation.

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 →