Container Corporation of India Ltd Q4 Result Update

Result highlights

• Container Corporation of India (CONCOR) Q4FY10 revenueincreased by 13% to INR 9,505Mn in line with Unicon’s estimates compared to INR 8,412Mn during same quarter last year.

• Q4FY10 EBITDA decreased by ~2% on YoY basis to INR 2,201Mn in line with our expectation mainly on account of the decline in the realizations. EXIM realization declined sharply by 4.7% YoY, whereas the Domestic realization declined 5% YoY.

• PAT for period under review decreased by 8% from INR 1,877Mn to INR 1,727Mn mainly due to higher rail freight expenses and lower other income. The other income for Q4FY10

decreased by ~20% to INR 383Mn against INR 482Mn during Q4FY09 due to drop in interest earnings.

• FY10 revenue increased by 8.3% at INR 37,023Mn against INR 34,172Mn for FY09. The operating margins (EBITDA) grew by ~5% to INR 9,763Mn in FY10 as compared to INR 9,311Mn in

FY09.

• Consolidated Net Profit marginally decreased by 1.6% to INR 7,786Mn in FY10 against INR 7,912Mn during FY09.

• For FY10 CONCOR incurred capex of INR 4Bn for acquisition of rakes and modernization of terminals. CONCOR added 14 rakes during the year taking its wagon fleet to 10,500 against 8,117

during FY09.

• Management guides for volumes growth of ~10% in FY11-12E(5-8% in EXIM and 12-15% in domestic).

Outlook

In our view, CONCOR is likely to face stiff competition from the private operators over the coming years.At the CMP of INR 1300, the stock trades at a PE of ~21.7 its TTM EPS of INR 60. CONCOR would continue be the market leader in the mid-term due to its vast and strategic network of rail.

 We recommend a HOLD on the stock for medium to long term.