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MOSL: LOGISTICS-EXIM rail container volumes maintain their healthy uptrend-Robust tonnage growth may ease margins pressure for CCRI

Logistics: EXIM rail container volumes maintain their healthy uptrend; Robust tonnage growth may ease margins pressure for CCRI

 

• EXIM originating container rail volumes maintained the double-digit growth trend of the last seven months. Originating container rail volumes in tonnage terms increased 21% YoY over Jan-Feb 2018.
• In our view, with ~73% market share in container rail movement, Container Corporation of India (CCRI) is likely to track growth rates of the underlying market.
• We, however, note that, in Feb-18, lead distance for EXIM declined by ~30km MoM and by ~46km from 4QFY17 levels. This, in our view, should have repercussions on margins.
• This apart, price hikes on key routes in 4QFY18 could impact margins. Healthy volume growth, though, could partly offset the impact.
• Domestic originating container rail volumes in tonnage terms declined by 1% YoY over Jan-Feb-2018. We had assumed 10% YoY growth for CCRI for 4QFY18. Thus, the decline in domestic volumes could impact our estimates for CCRI, but the extent of revision may be limited as domestic is not a major segment for CCRI.

 EXIM container rail data suggest strong growth over Jan-Feb 2018

• EXIM originating container rail volumes in tonnage terms grew by a robust 21% YoY over Jan-Feb 2018. Notably, growth has consistently been in double-digits for seven months now, translating into 15% YoY growth in container rail volumes for 2QFY18/3QFY18. With ~73% market share in container rail movement, CCRI reported EXIM originating volume growth of 8% YoY (TEU terms) for 2QFY18/3QFY18.