MOSL: CONTAINER CORPORATION (Buy)-Margins affected by trade imbalance
Container Corporation: Margins affected by trade imbalance
(CCRI IN, Mkt Cap USD4.2b, CMP INR489, TP INR614, 25% Upside, Buy)
- Sequential margins decline due to lower realization: Revenues (excluding SIES income) grew 11% YoY to INR15.73b v/s our estimate of INR16b, led by volume growth of 7% YoY. Realizations declined 3% QoQ due to trade imbalance. Thus, EBITDA margin declined 2.23pp QoQ, but increased 4.16pp YoY to 21.2% (lower than our estimate of 23.7%). Thus, EBITDA stood at INR3.34b (+38%YoY;-17%QoQ) v/s our estimate of INR3.8b. Tax rate for 3QFY19 was 29% v/s our estimate of 27% and lower than 31% in 3QFY18. PAT declined 1% YoY to INR2.74b v/s our estimate of INR3.225b.
- 9MFY19 performance: Sales/EBITDA/PAT increased by 11%/20%/15%. We expect 4QFY19 to witness 16%/20%/10% increase in sales/EBITDA/PAT.
- Management commentary: (1) Empty running charges stood at INR317m for EXIM and INR308m for domestic, (2) Lead distance for EXIM stood at 709km while for domestic, it stood at 1,453km. Average lead distance reduced by 16Km YoY to 786km, (3) Concor booked SIES incentive-related income of INR 844.5m, and (4) Originating volumes increased 1% YoY to 507,798 TEUs while domestic volumes increased 3% YoY to 67918 TEUs.
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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