Buy Container Corporation; target of Rs 710: Motilal Oswal

Motilal Oswal's research report on Container Corporation

Container Corporation (CCRI) reported subdued operational performance with 5% volume growth in 4QFY23. Revenue grew 6% YoY (in line) to INR21.6b during the quarter. CCRI’s EBITDA grew 8% YoY (13% below our estimate). PAT increased 8% YoY, 20% below our estimate. EBITDA margin stood at 20.5% (up 30bp YoY) in 4QFY23. Total volumes in FY23 grew 7.1% YoY to 4.4m TEUs with EXIM/Domestic volumes at 3.4m/0.95m TEUs (up 4.2%/18.7% YoY). For FY23, revenue increased 6.7% YoY to INR 81b, EBITDA margin stood at 22.7% (flat YoY), and Adj. PAT stood at INR 11.7b (up 10% YoY). Land License fee for 4QFY23 stood at INR1.04b (INR3.92b for FY23). This was below the management’s guidance of INR 4.45b for FY23.  CCRI has incurred a capex of INR5.6b in FY23 and expects to incur a capex of INR6b in FY24. The majority of the capex in FY24 would be toward rolling stock and handling equipment.

Outlook

We cut our EPS estimates for FY24/25 by 9%/3%, factoring in subdued outlook on EXIM volumes in the near to medium term. We reiterate our BUY rating with a revised DCF-based TP of INR710.

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