CONCOR Q3FY17: Likely to perform well in the coming quarter; Buy for medium & long term
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Container Corporation Of India Ltd (CONCOR) reported mixed December quarter results FY17. Revenue declined 5% YOY and stood at Rs. 13304 Mn compared to Rs. 14044 Mn in the current December quarter. Though PAT or Net Profit also declined 10% on yearly basis, sequential growth was strong at 18% in the current December quarter. EBDITA stood at Rs. 3457 Mn compared to Rs. 3584 Mn, YOY exhibiting de-growth of 4% whereas QOQ growth was a strong 13% in the current Q3 FY17. Other Income on the other hand grew positively both yearly and QOQ by 3% & 11% respectively in the current December quarter. Other Income was reported at Rs. 845 Mn against Rs. 820 Mn in corresponding quarter previous year. Operating Expenditure has been reined in as revenue declined both yearly and quarterly. Operating expenditure declined 4% yearly from Rs. 12132 Mn to Rs. 11619 Mn in the current December quarter. On quarterly basis fall was even higher at 6% in Q3 FY17. As a result EBDITA margin improved 46 basis points YOY and was reported at 25.98% against 25.52% corresponding quarter previous year. Sequentially growth was phenomenal at 386 basis points as operating expenditure de-growth outpaced decline in revenue QOQ. Finance costs are extremely low at Rs. 1.40 Mn almost constant YOY. Taxation growth was 0.77% YOY at Rs. 669 Mn in the current December quarter. Net Profit Margin was reported at 13.98% falling 66 basis points YOY compared to same period previous year.
CONCOR is an undisputed market leader having 73% market share in containerized traffic and the largest network of 68 ICDs/CFSs in India. In addition to providing inland transport by rail for containers, it has also expanded to cover management of ports, air cargo complexes and establishing cold-chain. The company developed multimodal logistics support for India's International and Domestic containerization and trade. CONCOR’S core business is divided into two main segments, Exim which contributes 80% of total revenues and domestic the rest. The company is expected to perform well in the coming quarter with the increase in traffic in international trade over the previous few months. There has been increase of 9.2% traffic in Exim Business & 1.50% in domestic business in 2016-17 compared to previous year as the company has taken various initiatives such as reduction in dwell time at JNPT, time tabled trains and strategic ties with ports and private terminals.
We recommend BUY for the stock for medium & long term investment with PE multiple of 32.04 x FY17E & 28.12 x FY18E with a target price of Rs. 1310.
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Suhani Adilabadkar is a Research Analyst registered with SEBI ((INH200003240)) She has done PGDBA (Finance), MS (Finance) and a Fellowship from Insurance Institute of India. She maintains a blog where she publishes research reports across industries - oasisfundamentals.blogspot.in.
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