Hold Container Corporation, target of Rs 800: Emkay

Emkay Global Financial Services has recommended a hold rating on Container Corporation of India with a target price at Rs 800 in its April 20, 2009 research report. “Concor reported Q4FY09 results which were in-line with our estimates.

The company reported decline in the revenue by 6.9% to Rs.8.4 billion, primarily driven by significant slowdown in the exim segment. However, domestic segment reported growth of 5.6%. Domestic revenue at Rs 2 billion was the highest revenue that the company has recorded in the past. EBITDA during the quarter declined by 3% to Rs 2.2 billion. EBITDA margins increased by 110bps to 26.8%. We believe the increase in the margins was due to a) improvement in the margins of the domestic segment b ) higher ground rent charges during the quarter. Net profit during the quarter declined by 7.3% to Rs 1.8 billion.”

“During the conference call, management highlighted that they expected volume growth of 10% during FY10. We believe this to be a very optimistic number on the backdrop of slowdown in the exim segment. Though imports have improved in the last two months, exports are still reeling under the pressure of downturn in the global economy. We expect 2% volume growth in FY10. For FY10, we expect the company to report revenue of Rs 36.5 billion and net profit of Rs 8.7 billion (EPS of Rs.67.2). The stock trades at 11.5xFY10 earnings. We maintain our target price at Rs 800, however, change our rating from BUY to HOLD,” says Emkay Global Financial Services’ research report.

Tags: Container Corporation, Emkay, Emkay Global, HOLD

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