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MOSL: CONTAINER CORPORATION (Buy)-DFC commissioning to drive earnings growth

CONTAINER CORPORATION: DFC commissioning to drive earnings growth

(CCRI IN, Mkt Cap USD5.3b, CMP INR644, TP INR780, 21% Upside, Buy)

 

Earnings outlook positive on account of improving margins

• Container Corporation (CCRI) reported surprisingly strong 1QFY22 earnings – reported EBITDA at INR4.3b beat our estimate by 31%, led by better-than-expected realization and lower-than-expected LLF provisioning.
• We believe the commissioning of the Dedicated Freight Corridor (DFC) is a big positive for CCRI as this would aid margin expansion through higher double stacking and improved asset utilization.
• We raise our FY22E/FY23E EPS estimate by 9%/7%. We maintain our Buy rating on expected volume and margin benefits from DFC.

 

Better realization drives 31% beat on EBITDA

• Revenue/EBITDA/PAT grew 52%/173%/313% YoY to INR18.1b/INR4.3b/INR2.5b and came in +5%/+31%/+34% v/s our estimate. This was led by better realization and lower-than-expected LLF provisioning.
• Blended realization improved 12% YoY to INR18,226/TEU (+4% v/s our estimate). EXIM/Domestic realization stood at INR16,032/INR28,347 per TEU, up 12%/3% YoY and 3%/3% above our estimate.
• Total volumes rose 35% YoY to 991,746 TEUs v/s our est. of 978,726 TEUs, with EXIM/domestic volumes at 815,077/176,669 TEUs (+30%/+69% YoY).
• The EBITDA margin stood at 24% (est 19%).