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HDFC Securities
Container Corp (Add)
Target: ₹720
CMP: ₹691.65
Container Corp's Q1-FY22 PAT at ₹250 crore, surprised positively due to improved loads, higher terminal charges, and operating leverage. As per the management’s assessment, the land license fees (LLF) charges for FY22 are revised lower to ₹375 crore (vs ₹450-500 crore for FY21), based on the revised land rates (by railways). Concor though will go ahead with its proposal to incur an upfront charge of ₹6,000-7,000 crore for using the railway land.
EXIM and domestic margins have both witnessed expansion in Q1FY22, led by improved loaded running and reduced empty running. The company has also increased terminal charges.
Currently, EXIM and domestic volumes are 80:20. The management expects this to become 60:40 with the increasing domestic volumes. It also plans to manufacture containers domestically to become self-reliant.
The strategic Khatuwas terminal is now connected to the main DFC. Although there will be no difference in the DFC freight rates, the company’s asset utilisation will increase. It will lead to higher profitability, market share gains, higher double-stacked volumes and enhanced turnaround times
We maintain our Add rating on the stock with a target price of ₹720 at 28x June-23 EPS
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