The financial results of Container Corp. of India Ltd (Concor), a wing of the Indian Railways that runs container trains and specialized warehouses, were below expectations for the March quarter.
The numbers were affected mainly due to poor performance of the domestic business, which felt the impact of higher rail haulage charges on specified commodities during the quarter. Revenue from the domestic business accounted for 21.5% of the total revenue and fell by about 5% against the same period last year.
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On the other hand, Concor’s export-import (exim) business accounted for the remaining revenue and performed comparatively better. Exim revenue increased by 7.6% year-on-year. Volumes increased by 5.6%, whereas that on the domestic route fell by 8.5%.
Note that exim volumes performance was relatively lower compared with the container traffic growth at major ports. One reason for this is because of higher unloading by shipping lines at port container freight stations rather than shipping the containers to the hinterland.
As far as realizations are concerned, on the domestic route, they increased at a faster pace (up 4%) than exim (up 2%).
Total revenue, thus, increased by 4.7% to Rs 995 crore. Operating profit margin was flat at 23% year-on-year, but slipped by 550 basis points compared with the December quarter. One basis point is one-hundredth of a percentage point.
“The sharp QoQ (quarter-on-quarter) decline in margin was because of the company’s policy of giving annual rebates and discounts to customers in the fourth quarter of every year,” said post-results note from Alchemy Share and Stock Brokers Pvt. Ltd. At the net level, profit increased at a faster pace of 17% to Rs 201 crore, helped by strong growth in other income (up 35%).
Concor’s scrip has lost 5% to Rs 1,199 since the results announcement, while the benchmark Sensex on the Bombay Stock Exchange (BSE) gained 2.5%. The stock underperformed the BSE-200 Index in the last fiscal as well.
Analysts do not seem optimistic on the stock prospects. One reason is because of higher competition from private firms and road transport, which may make passing on cost hikes challenging for Concor and put pressure on realizations. The exim business, though, is expected to do relatively better.
Graphic by Sandeep Bhatnagar/Mint
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