Container Corporation Q4 Review: Lower Volumes, Export-Import Realisations Weigh Margins, Says Jefferies
Jefferies estimates a 19% FY25-30 Ebitda compound annual growth rate, led by a 13% volume CAGR and a 50 bps annual margin improvement on average, driven by DFC benefits and operating leverage.
Container Corporation of India Ltd.'s fourth quarter results were an all-round miss for Jefferies, with the company's move to forgo low-margin business in the domestic segment, railway network congestion, and container delivery delays by its vendor contributing to a 14% YoY decline in domestic volumes.
Export-import realisations weighed on the margins, according to the brokerage. This, along with lower volume growth affected the firm's earnings before interest, taxes, depreciation, and amortisation during the quarter, which was 19% below the brokerage's estimate.
The management guided for a 13% year-over-year volume growth for FY26, driven by steady 10% YoY EXIM volume growth and a robust 20% domestic volume growth, the brokerage noted.
Container Corp Q4 Highlights (Standalone, YoY)
Revenue down 1.6% to Rs 2,281.37 crore versus Rs 2,317.63 crore.
Ebitda down 11% to Rs 433.46 crore versus Rs 489.01 crore.
Margin at 19% versus 21.1%.
Net profit up 3% to Rs 302.14 crore versus Rs 294.54 crore.
EXIM and domestic margins declined by 260 basis points and 400 bps YoY, respectively, due to weak volume growth and settlement of discounts and rebates.
"Management on the call highlighted that the company gained 40 bps market share in FY25. This implies only 2% YoY volume growth for Indian Railways vs. 10% YoY volume growth at Ports," the brokerage noted.
DFC connectivity to Jawahar Lal Nehru Port is seen as a key catalyst, with the target set for December 2025.
Jefferies estimates a 19% FY25-30 Ebitda compound annual growth rate, led by a 13% volume CAGR and a 50 bps annual margin improvement on average, driven by DFC benefits and operating leverage.
The brokerage maintained a 'buy' rating on Concor, with a price target of Rs 825, reflecting a 15% upside from the current price of Rs 720.
Downside risks include weak container volume growth due to geopolitical uncertainties, indefinite delays in DFC connectivity, delays in the shift from road to rail, increased competition from private sector port players focusing on integrated logistics, and potential reintroduction of land license fees by railways.
