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YES Securities
Target: ₹755
CMP: ₹695
Container Corporation of India’s (CCRI’s) revenues grew 9.4 per cent year-on-year to ₹1,980 crore, driven by growth in blended realisations to ₹19,528/TEUs (up 7.1 per cent year-on-year). CCRI recorded volume growth of 2.1 per cent year-on-year to 10,13,048 TEUs in Q1 FY23,
primarily due to steady jump in domestic volumes of 29.2 per cent to 228,191. EXIM
volumes stood at 784,857 TEUs (down 3.7 per cent year-on-year).
For Q1 FY23, EBITDA grew 9.0 per cent year-on-year to about ₹470 crore with EBITDAM witnessing contraction of 11 basis points year-on-year to 23.9 per cent). Margins were impacted due to increase in other expenses. Rail freight margin stood at 26 per cent for Q1 FY23 vs 28 per cent in Q4 FY22, while operating margin came in at 23.9 per cent.
Increase in rail haulage charges on account of reduction in exemption of haulage charges for empty containers to 15 per cent from earlier 25 per cent was effective from May 2022. The management took a price hike with effect from June, thereby passing the same to the customers. Delay in pass on of tariff hike marginally impacted Q1 margins. In the price hike, the management has considered tariff concessions to be eliminated soon.
Consequently, Adj PAT grew 14.7 per cent year-on-year to ₹290 crore, on account of lower-than-expected other income (down 27 per cent).
Rail share at JNPT, Mundra and Pipavav of CCRI was at 78 per cent, 42 per cent and 49 per cent.
The management has guided for healthy revenue/PAT growth of 10-12 per cent for FY23E on the back of strong volume growth across both the segments, healthy market share gains and pick-up in global trade. On the capex side, the management expects ₹550-600 crore to be spent in FY23. For the next 2-3 years, the company would be incurring major capex towards infrastructure, rolling stock, containers, and equipment.
We are positive on CCRI’s prospects and believe that it is best positioned to capitalise on favourable infrastructure-related tailwinds. We remain positive on the structural growth story considering: continual market share gains in domestic segment; strong EXIM volumes; and new strategic initiatives.
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