Container Corporation of India - 3QFY13 Results Update - Motilal Oswal

Results in line: CCRI's 3QFY13 results were in line with our expectations, with EBITDA down 5% YoY at INR2.6b (our estimate: INR2.8b). Revenue grew 3.5% YoY to INR10.8b (our estimate: INR11.7b), while net profit declined 1.8% YoY to INR2.4b (our estimate: INR2.3b).

- Volumes remain under pressure: Volumes in TEU terms remained under pressure. EXIM volumes declined 5.8% YoY to 0.52m TEU while domestic volumes declined ~5.2% YoY to 0.1m TEU. Overall volumes declined 5.7% to 0.64m TEU. While volumes declined in TEU terms, in tonnage terms, YTD volumes grew ~7.5% YoY, implying higher share of bulk goods in the cargo.

- EBITDA margin under pressure: EBITDA margin was 24.3%, down 219bp YoY and 11bp QoQ. Margins were negatively impacted on account of higher empties cost (up 20% YoY at INR570m) and CCRI's inability to pass on the entire haulage charge increase (70% passed on) by Indian Railways. CCRI has managed to successfully pass on ~70% of the price hike (~12.5% fare hike v/s cost hike of 18%); it is hopeful of passing on the remaining cost hike in a phased manner over the next few quarters.

Valuation and view: We are revising our revenue estimates by -3.9%/-7.8%/ -7.6% for FY13/FY14/FY15 and net profit estimates by 0.2/-6%/-5% for FY13/ FY14/FY15. CCRI trades at 12.6x/11.4x FY14E/FY15E earnings. We maintain Buy with a revised DCF-based target price of INR1,322 (upside of 42%).

Source : Equity Bulls

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