MOSL: CONTAINER CORPORATION (Buy)-Volumes below estimate, lower empty running charges aid sequential profitability
Container Corporation: Volumes below estimate, lower empty running charges aid sequential profitability
(CCRI IN, Mkt Cap USD4.3b, CMP INR492, TP INR564, 15% Upside, Buy)
- Sequential margins improve: Revenues (excluding SIES income) grew 12% YoY to INR17.5b, in line with our estimate led by volume growth of 3% YoY and realization increase of 9% YoY. EBIT/TEU increased 21% QoQ as empty running charges declined significantly on a sequential basis due to Indian Railways announcing 25% discount on empty containers (effective Jan’19). Thus, EBITDA stood at INR3.83b (+10% YoY; +15% QoQ) v/s our estimate of INR4.03b. Tax rate was higher at 27% as against 17.4% in 4QFY18. PAT came in at INR3.52b (+15% YoY; +28% QoQ) v/s estimate of INR 3.23b.
- FY19 performance: Volumes for the company increased 8.5% YoY to 3.8m TEUs in FY19. Sales increased 11% YoY to INR65.4b, while EBITDA increased 19% to INR14.4b. PAT for FY19 increased 15%YoY to INR 12b.
- Management commentary: (1) CONCOR announced stable rates for all customers for a year (effective 1st Apr’19). (2) CONCOR paid around INR30b to Indian Railways in early-April as advance freight in FY20. (3) CONCOR booked SIES incentive-related income of INR843.7m in 4QFY19. (4)Originating EXIM volumes decreased 2% YoY to 521,065 TEUs while domestic volumes increased 2% YoY to 79,293 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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