Buy Container Corporation; target of Rs 1370: ICICI Direct

ICICI Direct's research report on Container Corporation

Jawaharlal Nehru Port Trust (JNPT) continues to facilitate speedy movement of cargo aligning with the Centre’s aim to position India as a formidable player in global trade and double its exports. The efforts are argeted towards improving liners dwell time, which would result in faster turnaround enabling higher throughput. Launching of direct port delivery (DPD) facility, RFID tagging of container are some initiatives, which have improved operational effic iencies of the port.  Extending these efforts, JNPT has recently released standard operating practice (SOP) directing container train operators (CTOs) to clear the Exim containers in transition from the port area within three days. These containers would be shifted by road to nearby Dronagiri rail terminal (DRT), which is owned and managed by Concor. Also, the movement of these containers would be managed by Concor while charges on the same would be paid by respective CTOs to Concor.

Outlook
We factor in revenue CAGR of ~15% in FY17 - 19E to Rs 7979 crore. This is expected to be followed by a gradual restoration of EBITDA margin to 23% in FY 19E, resulting in EBITDA and PAT growth at a CAGR of 20% each in FY 17 - 19E. We maintain BUY rating on Concor valuing it at one - year trailing average P/E multiple of 27 .3 x on an FY19 estimated EPS of Rs 50 .2 and arrived at a target price of Rs 1370.

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