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MOSL: CONTAINER CORPORATION (BUY) : Well placed to capitalize from the DFC opportunity

(CCRI IN, Mkt Cap USD4.9b, CMP INR624, TP INR750, 20% Upside, Buy)

• CCRI witnessed a robust performance over FY22, with 12% volume growth and robust margin improvement. Growth was driven by Domestic volumes, which grew 32% in FY22 as against an 8% growth in EXIM volumes.
• Going forward, CCRI is very well placed to capitalize on the DFC opportunity. While it is already benefiting from the partial commissioning of the Rewari-to-Palanpur section of WDFC (with a faster turnaround time and improved efficiency), additional benefits are expected to flow through once JNPT and Dadri are connected to the DFC. It aims to handle ~5m TEUs in FY23E.
• The company is looking to enter into a long-term lease arrangement for its terminals owned by the Indian Railways and expects a development on that front soon. With decent volume growth and margin, we expect CCRI to clock a revenue/EBITDA/PAT CAGR of ~19%/20%/21% over FY22-24. The stock trades at 13x FY24E EV/EBITDA. We maintain our Buy rating on the stock with a DCF-based TP of INR750, implying a potential upside of 20%.

Commissioning of the DFC to drive sustainable volumes and earnings performance for CCRI

• CCRI is witnessing the benefits emanating from the recent commissioning of the Rewari-to-Palanpur DFC stretch. There has been a significant gain in terms of faster turnaround time and improved efficiency. Further benefits are expected once the DFC is connected to Dadri and JNPT. While DFC construction has been slow due to the COVID-19 pandemic and land availability issues, the same is expected to be ramped up.