Buy Container Corporation; target of Rs 660: HDFC Securities

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HDFC Securities' research report on Container Corporation

EBITDA margins expanded to 24.6% (+330/270bps YoY/QoQ) due to (1) Price hikes (~4%) taken in Mar-19 (2) Lower empty running costs at Rs 489mn vs. Rs 580mn YoY (60bps) (3) Restatement of lease exps of Rs 150mn (90bps) under IND AS 116 and (4) Revenue from new streams. We expect profitability to remain healthy due to operational efficiencies. Reported PAT at Rs 2.3bn is not comparable YoY as SEIS income (Rs 708mn/843mn YoY/QoQ) has not been booked in.

Outlook

Despite flat volumes, Container Corporation (CCRI) reported a healthy beat in EBITDA margins at 24.6%. Medium term growth drivers are intact as the co will benefit from phased commissioning of the DFC and from margin efficiencies. Reiterate BUY with a revised TP of Rs 660 (at 24x Sep-21 EPS).

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