Container Corp Q1 Review: Jefferies Cuts Target Price As Weak Volume Growth Weigh On Operating Profit

Jefferies cut Container Corporation of India Ltd.'s target price as weak domestic volume growth weighed on its operating profit. Its consolidated Ebitda declined 2% on the year to Rs 432.68 crore in April–June from Rs 441.63 crore.

However, Container Corp's reported Ebitda is 7% below Jefferies estimates due to weak domestic volumes and realisations. Even if the brokerage adjusts the Rs 21 crore one-time expense, the operating profit would have missed Jefferies estimates by 2%, the brokerage said.

The company's domestic volume declined 3% on the year as Container Corp chose to let go of low-margin business, according to Jefferies. Container Corp has lost 190 basis points year-on-year in market share because of weak demand at its key inland container depots, the brokerage said.

Jefferies has cut the target price of Container Corp to Rs 650 apiece from Rs 825 apiece. The current target price implied a 12.3% downside from Wednesday's close price.

• Revenue up 2.4% to Rs 2,153.63 crore versus Rs 2,103.13 crore.

• Net profit up 3% to Rs 266.54 crore versus Rs 258.17 crore.

• Ebitda down 2% to Rs 432.68 crore versus Rs 441.63 crore.

• Margin narrows to 20.1% versus 21%.

Jefferies has also lowered Ebitda estimates for financial years 2026 and 2028 by 4% to reflect a weak quarter. The brokerage is estimating 18% Ebitda CAGR for the period. A 12% volume CAGR and a 60-basis-point annual margin improvement on average between the dedicated freight corridor and operating leverage will drive the Ebitda growth.

Receipt of new terminal rakes, new terminal additions, and management initiatives on new cargo and customer tie-ups are expected to drive volume growth recovery for Container Corp. Jawaharlal Nehru Port Trust — western distributed coordination connectivity is targeted for completion by the end of December. It can drive potential growth recovery for financial years 2027 and 2028, according to Jefferies.