MOSL: CONTAINER CORPORATION (Buy)-Higher profits led by SIES income
Container Corporation: Higher profits led by SIES income
(CCRI IN, Mkt Cap USD4.6b, CMP INR648, TP INR769, 19% Upside, Buy)
- EXIM segment drives margins: Revenue (excluding SIES income) grew 3% YoY to INR14.98b (our estimate was INR16b), led by volume growth of 11% YoY. Realization declined 3% YoY due to lower lead distance. Adjusted EBITDA margin contracted 1.1pp YoY and 0.9pp QoQ to 21.4% (our estimate was 23.9%). Adjusted EBITDA declined 2% YoY to INR3.2b (our estimate was INR3.83b), as the impact of higher tariff was negated by 25% YoY increase in land license fees. Tax rate for 1QFY19 was 28% (our estimate was 20%), higher than 25% in 1QFY18 due to booking of SIES income in 1QFY19. Reported PAT grew 4% YoY to INR2.52b (our estimate was INR2.67b) due to higher than estimated tax rate. CCRI has booked SIES incentives worth INR700m in 1QFY19.
- Management commentary: (1) CCRI initiated tariff hike of INR1,000/TEU with effect from 15 May 2018, whose full impact will be seen in subsequent quarters; (2) Land license fees grew 25% YoY in 1QFY19, impacting margins; (3) CCRI has gained 4% market share in the domestic segment and lost 1% market share in the EXIM segment on a YoY basis; (4) Empty running charges for CCRI declined 14% YoY to INR582m, driven by higher exports and double stacking; (5) Double stacking trains increased by 52% YoY.
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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