CONCOR - Q1FY21RU - YES SECURITIES

Container Corporation of India (Q1FY21) - ADD (Target Rs419, Upside 8.8%)

Container Corporation (Concor) reported weak set of numbers during Q1 FY21 with topline de-growing 27.8% yoy (to Rs.11.9bn) as outbreak of COVID-19 globally and in India impacted performance. Originating volume during Q1 FY21 stood at ~465,000 TEUs (down ~17% yoy). Operating margin has declined sharply to 13.3% (down 1,112bps yoy). During the quarter, the company has provided ~Rs.1.2bn towards Land License Fee (LLF) for all terminals on Railway Land. During Q1 FY21, CONCOR received a demand notice of Rs.7.8 bn from Railways as the Land License Fee (LLF) for FY21 for Okhla and Tughlakabad Terminals of CONCOR at Delhi. However, as per company's assessment, the demand is not as per Railway's extant policy. The company has estimated ~Rs.4.5 bn towards LLF for all terminals on Railway Land for FY21. The Company has represented its case to Railways and is awaiting response on the same.

We expect revenues to be under pressure in FY21 with subdued volumes and increasing competition. Also, margin is likely to be under pressure with higher scheduled payment towards LLF. With normalization of current scenario and improved volumes, we expect revenue and margin pressure to improve in FY22E. While we largely maintain our topline estimates, we expect margin to come under pressure with subdued volumes and increasing competition. While we have not considered the increased LLF demand into our forecasts, the high uncertainty regarding the outcome would be an overhang on the stock. Considering the uncertainty regarding LLF, we downgrade our rating from BUY to ADD with a 12m TP of Rs.419 (22x FY22E PE multiple).

Shares of CONTAINER CORPORATION OF INDIA LTD. was last trading in BSE at Rs.377.25 as compared to the previous close of Rs. 386.35. The total number of shares traded during the day was 223135 in over 9595 trades.

The stock hit an intraday high of Rs. 394.95 and intraday low of 376.2. The net turnover during the day was Rs. 85232540.

Source : Equity Bulls

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