MOSL: CONTAINER CORPORATION (Neutral)-Healthy volume growth-margins improving steadily
Container Corporation: Healthy volume growth; margins improving steadily
(CCRI IN, Mkt Cap USD5.4b, CMP INR1440, TP INR1469, 2% Upside, Neutral)
- Revenue increased 11% YoY to INR14.5b (est. of INR14.8b), led by volume growth of 11% YoY, while realizations were flat YoY. Adj. EBITDA margin came in at 20.4% v/s our estimate of 20.9% (+0.6pp YoY; +0.7pp QoQ). Adj. EBITDA increased 14% YoY (+5% QoQ) to INR2.97b (est. of INR3.1b) due to lower profitability in the domestic segment. Tax rate was higher at 31% (est. of 27%) and other income declined 14% YoY due to lower yield. Hence, adj. PAT of INR1.8b (est. of INR2.48b) was flat YoY (-16% QoQ). CCRI booked incentives of INR1.86b for prior period, while employee expenses were higher by INR375m due to the implementation of wage hike effective Jan’17. Hence, reported PAT was at INR2.9b (+55%YoY; +30% QoQ).
- Key segmental trends and guidance: EXIM segment witnessed an 11% YoY increase in volumes (in line with estimates), while realization declined 2% YoY to INR15,325/TEU due to lower lead distances. However, EBIT/TEU for the EXIM segment increased 6% YoY to INR2,869, led by lower empty running charges on account of higher double-stacking. Domestic segment witnessed volume increase of 9% YoY and realization rose 9% YoY to INR25,039/TEU. EBIT/TEU for the domestic segment increased to INR503 v/s INR27/TEU in 3QFY17. Management expects volume growth of ~12% YoY for FY18 (largely in line with 9MFY18 performance), with lead distance trend depending on ramp-up of the JNPT terminal.
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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