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Container Corporation of India Ltd Neutral
CCRI.BO, CCRI IN
1QFY12 PAT growth aided by lower tax rates; operating metrics disappoint; management lowers volume guidance
Concor reported 1Q PAT of Rs.2.3B (+21% yoy), which was ahead of
our estimate. However, this was driven by a lower tax rate (-600 bps yoy)
and higher other income (+64% yoy). The operating performance
continued to disappoint as volume growth remains anemic (-0.7% yoy) on
falling domestic segment sales (-13% yoy) and sedate growth in the EXIM
segment (+2.5% yoy). Management has lowered its volume guidance to
9% for the EXIM segment in FY12E.
Conference call takeaways: Volume outlook: While industry EXIM
traffic grew by 8% in 1Q, Concor underperformed (+2.5% yoy) as traffic at
JNPT continued to be impacted by capacity bottlenecks. Consequently, the
share of JNPT has reduced to 60% for Concor (vs. 74% last year) while that
of Mundra and Pipavav ports has risen to 11% and 14%, respectively. Lead
distances have reduced further to 1,080 km. The domestic traffic continued
to decline due to the adverse impact of the freight rate hikes by Railways in
3QFY11. Realisations: Average realisations improved by 4% yoy due to
strong growth in related services i.e., warehousing, etc. The share of non
railways-related revenues increased to c.25% this quarter (up from 21%
earlier). Margins: EBITDA Margins expanded +40bp yoy aided by a higher
share of EXIM traffic as well as better cost management (aided by
substituting leased equipment with company owned). Other income (+64%
yoy) was driven by higher interest income and increased dividend payout
from its JVs. Capex: Company plans to incur a capex of 7bn in FY12.
Maintain estimates and PT: We are maintaining our FY12 and FY13
estimates and PT. We reiterate our Neutral rating, given our view that while
Concor will benefit from growth in the EXIM segment, the policy
environment remains uncertain; further, the stock price at current levels is
adequately factoring in the growth ahead. Risks: on the upside – higherthan-
expected operating margins and railways taking back the revised
freight rates. On the downside: growth rates may be impacted in case of a
moderation in global economy; any further policy change may impact
business prospects
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Container Corporation of India Ltd Neutral
CCRI.BO, CCRI IN
1QFY12 PAT growth aided by lower tax rates; operating metrics disappoint; management lowers volume guidance
Concor reported 1Q PAT of Rs.2.3B (+21% yoy), which was ahead of
our estimate. However, this was driven by a lower tax rate (-600 bps yoy)
and higher other income (+64% yoy). The operating performance
continued to disappoint as volume growth remains anemic (-0.7% yoy) on
falling domestic segment sales (-13% yoy) and sedate growth in the EXIM
segment (+2.5% yoy). Management has lowered its volume guidance to
9% for the EXIM segment in FY12E.
Conference call takeaways: Volume outlook: While industry EXIM
traffic grew by 8% in 1Q, Concor underperformed (+2.5% yoy) as traffic at
JNPT continued to be impacted by capacity bottlenecks. Consequently, the
share of JNPT has reduced to 60% for Concor (vs. 74% last year) while that
of Mundra and Pipavav ports has risen to 11% and 14%, respectively. Lead
distances have reduced further to 1,080 km. The domestic traffic continued
to decline due to the adverse impact of the freight rate hikes by Railways in
3QFY11. Realisations: Average realisations improved by 4% yoy due to
strong growth in related services i.e., warehousing, etc. The share of non
railways-related revenues increased to c.25% this quarter (up from 21%
earlier). Margins: EBITDA Margins expanded +40bp yoy aided by a higher
share of EXIM traffic as well as better cost management (aided by
substituting leased equipment with company owned). Other income (+64%
yoy) was driven by higher interest income and increased dividend payout
from its JVs. Capex: Company plans to incur a capex of 7bn in FY12.
Maintain estimates and PT: We are maintaining our FY12 and FY13
estimates and PT. We reiterate our Neutral rating, given our view that while
Concor will benefit from growth in the EXIM segment, the policy
environment remains uncertain; further, the stock price at current levels is
adequately factoring in the growth ahead. Risks: on the upside – higherthan-
expected operating margins and railways taking back the revised
freight rates. On the downside: growth rates may be impacted in case of a
moderation in global economy; any further policy change may impact
business prospects
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