Container Corporation
Estimate change
TP change
Rating change
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
6 February 2021
3QFY21 Results Update | Sector: Logistics
CMP: INR467
TP: INR555 (+19%)
Buy
Realization boost drives earnings surprise
CCRI IN
609
284.4 / 4
602 / 263
8/-33/-45
985
DFC commissioning to drive sharp growth in earnings
Financial Snapshot (INR bn)
Y/E MARCH
Sales
EBITDA
Adj. PAT
EBITDA Margin (%)
Adj. EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
Ratios
Net D:E
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA(x)
Div. Yield (%)
FCF Yield (%)
2021E
63.5
13.4
8.1
21.2
13.4
(19.5)
171
(0.4)
8.0
8.2
55.0
34.9
2.7
18.3
1.57
1.47
2022E 2023E
75.6 92.2
15.7 19.1
9.7 12.0
20.8 20.8
15.9 19.7
19.0 24.0
178 185
(0.4)
9.1
9.3
60.0
29.3
2.6
15.3
2.04
2.81
(0.4)
10.9
11.1
60.0
23.7
2.5
12.3
2.54
3.56
CCRI’s 3QFY21 earnings surprised positively, with realization growing 7%
QoQ, driving a 17% beat on EBITDA. We expect volume growth to remain
strong in the near/longer term from a recovery in EXIM trade/Dedicated
Freight Corridor (DFC) project.
We have raised our FY21E/FY22E EBITDA by 19%/13% and TP by 22% to
INR555 per share on higher realization. Maintain
Buy
on expected volume
and margin benefits from DFC. Clarity on land licensing fee (LLF) would aid
re-rating of the stock.
Revenue/EBITDA/PAT grew 15%/nil/9% YoY to INR17.5b/INR3.7b/INR2.4b
and was 11%/17%/32% above our estimate on higher realization (+8% YoY)
at INR18,155/TEU. EXIM/domestic realization stood at
INR16,140/INR28,197 per TEU, up 6%/14% YoY.
Total volumes rose 6% YoY to 966,015 TEUs (in line), with EXIM/domestic
volumes at 804,557/161,458 per TEUs (+5%/+12% YoY).
EBITDA margin was lower at 21.2% v/s 24.3% in 3QFY20 due to higher LLF
at INR1.2b and a one-time provision of INR0.5b towards post-retirement
medical expenses of retired employees. Adjusted for that, EBITDA stood at
INR4.21b (+13% YoY) and EBITDA margin at 24%.
9MFY21 revenue/EBITDA/PAT stood at INR44.5b/INR8.4b/INR4.9b and was
down 9%/30%/31% YoY due to ~8% decline in volumes and increase in land
licensing fees (INR3.5b in 9MFY21 v/s ~INR1.4b in FY20).
Realization improved on account of higher loads, increase in lead distance,
and free empty container movement allowed by railways during the 15-day
window in 3QFY21.
The management has provided ~INR 4.5b in FY21 for LLF, based on 6% of
land value. The Ministry of Railways has, however, demanded a higher
amount (INR13.4b, including GST) and clarity is expected by FY21-end.
The management has guided for a 5% YoY drop in total volumes (in FY21)
as against its previous guidance of an 8% decline.
The benefit of DFC should be realized in FY22 as the route is undergoing
trial runs. It will enhance the pricing power of the company, led by a faster
turnaround time, more double stacking, and timetabled trains on the route.
CCRI is a direct play on the upcoming large rail freight infrastructure (DFC).
We expect a 19% EBITDA CAGR over FY21-23E, led by healthy volume
growth from DFC and margin improvement on operating leverage benefits.
Clarity on the final land license fee (LLF) to be charged by the railways
remains key for the near-term stock performance.
The stock trades at 15.3x FY22E EV/EBITDA. We derive a DCF-based target
price of INR555/share based on a WACC of 12%.
Higher realizations drives EBITDA beat
Highlights from the management commentary
Shareholding pattern (%)
As On
Promoter
DII
FII
Others
Dec-20
54.8
16.7
23.3
5.3
Sep-20
54.8
15.8
24.5
4.9
Dec-19
54.8
13.5
27.2
4.5
FII Includes depository receipts
Valuation and view
Amit Murarka - Research analyst
(Amit.Murarka@motilaloswal.com)
Basant Joshi - Research analyst
(Basant.Joshi@motilaloswal.com)
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Investors are advised to refer through important disclosures made at the last page of the Research Report.
3 September 2019
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