Buy Container Corporation of India; target of Rs 468: Prabhudas Lilladher

Prabhudas Lilladher's research report on Container Corporation of India

CCRI reported decent 1Q numbers led by healthy volumes despite impact of Covid-19 pandemic indicating signs of revival in economic activity. However, the company did indicate that competition intensity continues to remain high primarily from private players resulting into lower realization. Further, as a move to focus on profitability, CCRI handed over 17 loss-making terminals to Indian Railways while shifting volumes to its nearby terminals. Management retained its earlier guidance of 20% decline in handling volumes for FY21E. We believe CCRI’s unmatched presence across the country as compared to its peers coupled with positive long-term industry prospects would support its prolonged growth and help maintain its market leadership. We remain positive on the structural growth story considering 1) continuous market share gains in the domestic segment 2) strong EXIM volumes, 3) new strategic initiatives and 4) expected pick-up in economic activity.

Outlook

At CMP, the stock trades at a P/E of 34.5x/20.6x FY21E/FY22E earnings and trades at EV/EBITDA of 17.7x/12.2x FY21E/FY22E earnings. Due to recent fall in price, we have changed our rating from ACCUMULATE to BUY while maintaining our TP of Rs468.

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