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Concor: Lower Realisations Offset Volume Recovery - Views on News from Equitymaster
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Concor: Lower Realisations Offset Volume Recovery
Apr 11, 2017

Container Corporation of India Ltd has announced its results for the quarter ended December 2016 (3QFY17). The company has reported 5.3% year on year (YoY) decline in the topline and 9.6% YoY decline in the bottom-line for the quarter. Here is our analysis of the results.

Performance Summary
  • Revenues for the quarter were down 5.3% YoY mainly due to lower realisations due to shortening of lead distance. The lead distance is coming down due to shift in ICD (Inland Container Depot) traffic from JNPT to Mundra terminal.
  • EXIM segment revenues declined 6.6% YoY while domestic segment reported flat sales. Handling volumes in EXIM segment grew 11% YoY while domestic segment handling volumes grew 6% YoY. Concor witnessed an increase in market share from a little above 73% to 75.5%.
  • Operating profit for the quarter declined 5.5% YoY, with margins at 19.6% ( versus 19.7% in 3QFY16), mainly on account of lower lead distances and competition. EXIM segment operating profit declined 12.0% YoY while domestic segment operating profit was down 92% YoY. There has been a sequential decline in the empty running expenses in EXIM due to double stacking operations at Khatuwa terminal. Lower utilisation and empty running costs remain a matter of concern in the domestic segment.
  • Net profit for the quarter declined 10% YoY with net profit margins at 14%, down from 14.6% in 3QFY16, mainly due to increase in depreciation expense and higher effective tax rate.
  • The company has announced bonus - one share for every four shares and an interim dividend of Rs 9.6 per share.

    Standalone Performance Summary
    (Rs m) 3QFY16 3QFY17 Change 9MFY16 9MFY17 Change
    Sales 14,044 13,304 -5.3% 43,266 40,482 -6.4%
    Expenditure 11,280 10,692 -5.2% 34,543 32,964 -4.6%
    Operating profit (EBDITA) 2,764 2,612 -5.5% 8,723 7,519 -13.8%
    EBDITA margin (%) 19.7% 19.6% 20.2% 18.6%
    Other income 820 845 3.0% 2,491 2,300 -7.7%
    Depreciation 852 927 8.8% 2,587 2,641 2.1%
    Interest (net) 2 1 -6.7% 2 4 109.5%
    Profit before tax 2,730 2,529 -7.4% 8,625 7,173 -16.8%
    Pretax margin (%) 19.4% 19.0% 19.9% 17.7%
    Tax 674 669 -0.8% 2,179 1,950 -10.5%
    Effective tax rate (%) 24.7% 26.4% 25.3% 27.2%
    Normal Profit after tax/(loss) 2,057 1,860 -9.6% 6,446 5,223 -19.0%
    Normal Net profit margin (%) 14.6% 14.0% 14.9% 12.9%
    No. of shares (m) 244
    Diluted earnings per share (Rs)* 27.2
    Price to earnings ratio (x)* 42.2


    Segmental breakup
    Rs m 3QFY16 3QFY17 Change 9MFY16 9MFY17 Change
    EXIM
    Revenue 11,327 10,581 -6.6% 35,257 32,789 -7.0%
    Operating Profits (EBIT) 2,059 1,811 -12.0% 6,602 5,616 -14.9%
    Operating profit margins (EBIT margin %) 18.2% 17.1% 18.7% 17.1%
    Domestic
    Revenue 2,717 2,723 0.2% 8,008 7,693 -3.9%
    Operating Profits (EBIT) 43 3 -92.5% 146 112 -23.2%
    Operating profit margins (EBIT Margin %) 1.6% 0.1% 1.8% 1.5%

    Cost breakup
    (Rs m) 3QFY16 3QFY17 Change 9MFY16 9MFY17 Change
    Rail freight expenses 8,848 8,111 -8.3% 27,267 25,101 -7.9%
    as a % of sales 63.0% 61.0% 63.0% 62.0%
    Employee costs 404 414 2.5% 1,161 1,199 3.3%
    as a % of sales 2.9% 3.1% 2.7% 3.0%
    Other expenses 2,028 2,167 6.9% 6,116 6,664 9.0%
    as a % of sales 14.4% 16.3% 14.1% 16.5%
    Total expenses 11,280 10,692 -5.2% 34,543 32,964 -4.6%
    as a % of sales 80.3% 80.4% 79.8% 81.4%
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