Buy Container Corporation; target of Rs 625: ICICI Direct

ICICI Direct's research report on Container Corporation

Adjusted revenues (ex-SEIS incentive) grew 8% YoY to Rs 1572 crore. While domestic revenues grew 11% YoY to Rs 357 crore, Exim revenue grew 7% YoY to Rs 1216 crore. Overall volume growth was at 14% to 9.26 lakh TEUs EBITDA margins increased 336 bps YoY to 21.2%, mainly due to lower terminal & other expenses. Hence, EBITDA grew 29% to Rs 334 crore However, PAT de-grew 5% to Rs 275 crore, as strong operational performance was negated by lower SEIS incentive (exceptional income) during the quarter (Rs 85 crore vs. Rs 186 crore in Q3FY18).

Outlook

The management expects to increase its container volumes from 4 million TEU in FY19E to 7 million TEU in FY21 via 1) organic volume growth 2) its foray in distribution logistics 3) coastal shipping volumes. We maintain BUY with a target price of Rs 625, assigning a P/E multiple of ~21x to FY21E EPS of ~Rs 30.