Container Corporation of India - March 2013 Results Preview - Motilal Oswal

- We estimate revenue growth of 10.4% YoY, driven by overall volume growth of 2.5% and realization growth of 7.8% YoY. We expect EXIM volumes to decline by 0.8% to 0.53m TEU and domestic volumes to grow by 17% YoY to 0.15m TEU.

- EBITDA margin is likely to shrink 221bp QoQ (expand 119bp YoY). Till FY12, CCRI used to account its entire cash discount to its bulk customers in 4Q. Due to this, its 4Q results in FY12 were adversely impacted. However, from FY13, CCRI has started to account for cash discount on a quarter-wise basis. Hence, the one-time 4Q hit witnessed in FY12 is unlikely in FY13.

- We expect net profit to decline by 4.9% YoY to INR2.1b.

- During 2HFY13, Indian Railways increased haulage charges by as much as 22-31% across segments in two phases (December 2012 and February 2013). The management mentioned that CCRI has absorbed ~6% of the price hike and full impact of the increase in haulage charges for empties. Nonetheless, gains across the non-freight segment are likely to partially offset losses from higher haulage charges. We expect the negative EBITDA margin impact to be limited to ~2%.

- CCRI trades at 13.9x/12.5x FY14/FY15E earnings. We have a Buy rating on the stock, with a price target of INR1,322.

Source : Equity Bulls

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