CONCOR LTD -Q2 FY18

Container Corporation Of India Ltd (CONCOR) reported robust yearly growth in September quarter FY18. Revenue jumped 5% YOY at Rs. 14302 Mn compared to Rs. 13603 Mn in the corresponding September quarter previous year.  PAT or Net Profit grew 41% YOY at Rs. 2229 Mn against Rs. 1578 Mn same period previous year. EBDITA was reported at Rs. 3774 Mn compared to Rs. 3036 Mn growing 24% YOY. Other Income exhibited positive growth both yearly and QOQ rising 25% & 2% respectively in the current Q2 FY18 quarter. Other Income was reported at Rs. 954 Mn against Rs. 763 Mn in corresponding quarter previous year. Sequential growth has been lower with Revenue, EBDITA & PAT declining by 2%, 10% & 8% respectively in the current quarter. Operating Expenditure grew 1% YOY and 2% sequentially in the current September quarter. Operating expenditure stood at Rs. 11481 Mn in Q2 FY18 compared to Rs. 11330 Mn in Q2 FY17. EBDITA margin expanded 407 basis points YOY and declined 246 basis points sequentially in the current September quarter. EBDITA Margin was reported at 26.39% against 22.32% corresponding quarter previous year. Taxation expenditure de-growth was about 3% YOY at Rs. 576 Mn in the current September quarter against Rs. 596 Mn same period previous year. Sequentially Taxation witnessed decline of 14%.  Tax rate was lower on account of policy change and 80IA benefit received by the company last year. Net Profit Margin was reported at 15.60% expanding 399 basis points YOY and fell 112 basis points sequentially in the current September quarter FY18. CONCOR is an undisputed market leader having 73% market share in containerized traffic and the largest network of 72 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. Exim revenues were reported at Rs. 11415 Mn against Rs. 11137 Mn same period previous year rising 2% YOY. Domestic revenues on the other hand jumped 17% YOY at Rs. 2887 Mn compared to Rs. 2466 Mn in Q2 FY17. Sequential performance was hampered in both segments particularly domestically due to GST. The company is moving forward with its capex plans which is around Rs. 10000 Mn in the current year.  The company is planning to commission seven logistics parks in the next two quarters.  The company plans three MMLPs at Nagpur, Mihan, Raipur and Paradip in Q3 FY18. The remaining four MMLPs at Balli in Goa, Baroda, Varnama in Andhra Pradesh Krishnapatnam port and New Mangalore Port in Kanataka in Q4 FY18 . The company has witnessed stable growth in September quarter and is expected to grow strongly in the long run as only 20% of domestic trade is containerized which gives vast scope of opportunities for companies like CONCOR. We recommend BUY for the stock for medium & long term investment with a target price of Rs. 1520.

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