MOSL: CONTAINER CORPORATION (Neutral)-Recognition of export incentives boosts profitability
​Container Corporation: Recognition of export incentives boosts profitability
(CCRI IN, Mkt Cap USD3.9b, CMP INR1207, TP INR1162, 4% Downside, Neutral)
- Profitability improvement led by export incentives: 4QFY17 EBITDA increased 6% YoY (+90% QoQ) to INR4.95b, as export incentives of INR2.3b for full-year FY17 were booked in the quarter.
- Originating volumes grow moderately: EXIM originating volumes rose 6% YoY, while EXIM handling volume growth was at 8% YoY, possibly due to higher double-stacking at Kathuwas .Total handling volumes grew 8% YoY to 800k TEUs (EXIM at 665k TEUs: +8% YoY; domestic at 135k TEUs: +8% YoY).
- Adjusted for export incentives, EXIM realizations decline: 4Q EXIM revenue fell 5% YoY to INR12.4b due to 9% YoY lower realizations (calculated on originating volumes). Realizations have been structurally trending lower due to a reduction in lead distance by ~11% YoY in EXIM in FY17 and pricing pressure in industry. Realizations/TEU in EXIM thus fell 9% YoY to INR26,704.
- EXIM EBIT/TEU on originating volumes (adjusted for export incentives) was at INR3,808 (+3% YoY, -2% QoQ) due to pricing pressure, despite lower empty running charges and higher double-stacking benefits. Management expects margins to improve due to increased proportion of double-stacking at Khatuwas from present 10% to up to 15% in the medium term.
Container Corp. of India is engaged in the transportation of containers by rail, management of ports, air cargo complexes and establishing cold-chain. Though rail is the main stay of Co.'s transportation plan, road services are also provided to cater to the need of door-to-door services, whether in the International or Domestic business. Co. is organized on All-India basis into two major operating divisions which are EXIM and Domestic divisions.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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