The uncertain macroeconomic environment has made the management at the Rs 3,341 crore Container Corporation (Concor) rather cautious. The company believes that exports and imports over the next two quarters, could be somewhat sluggish. As it is, activity at ports seems to have lost some momentum—the growth numbers for the September 2008 quarter were a disappointing 13 per cent, which is way below the 23 per cent seen at the same time last year.
If the firm was able to post a revenue growth of 10 per cent y-o-y, it was due to better realisations — up 9 per cent y-o-y. In August, Indian Railways upped its haulage charges and consequently, Concor too increased prices by about 15 per cent. That’s why revenues from the export-import business, which accounts for 80 per cent of the company’s revenues, grew 13 per cent.
The management says restrictions on exports of some commodities are the culprit. In the home market, Concor has been hit because key clients like Indorama Synthetics, Mitsubishi and IOC haven’t done much business and also because road transporters appear to have eaten into its share. The bottom line is that revenues in the home market came off by about 1 per cent. In the June quarter, they had fallen 4 per cent.
While the net profit is up a smart 29 per cent, it’s unlikely that Concor will see further operating efficiencies. While the balance sheet is strong with no debt and cash of Rs 1,740 crore, unless revenue picks up, margins could be under pressure in the coming quarters and earnings should grow at 14-15 per compounded over the next couple of years. The stock has outperformed the Sensex since July and at the current price of Rs 715, trades at 10.5 estimated FY09 earnings.