Release Date: August 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Container Corporation of India Ltd (BOM:531344, Financial) reported a 6% growth in throughput, aligning with India's international trade growth.
- The company achieved a 15% year-on-year growth in the domestic stream for the quarter.
- Operating income growth was reported at 9.3%, with PAT growth at 4.6%.
- Significant infrastructure additions include the commissioning of a new high-speed rake and procurement of 2,500 new containers, bringing the total fleet to around 47,000 containers.
- The company has initiated online booking of containers at all terminals, which has been well-received by the trade and is proving to be a strong marketing tool.
Negative Points
- EXIM growth rate was only 3.3% year-on-year for the quarter, raising concerns about meeting volume guidance.
- Domestic realization and profitability were lower compared to the past three quarters, attributed to factors like discounts and empty running costs.
- The rail coefficient has decreased at major ports, with a notable drop at Nhava Sheva, Mundra, and Pipavav.
- The company faces challenges in achieving the projected 15% volume growth for FY '25, requiring an average EXIM volume growth of 20% year-on-year.
- There are uncertainties regarding the final connectivity of the Dedicated Freight Corridor (DFC) to Nhava Sheva, with the target date of March 2025 appearing challenging.
Q & A Highlights
Highlights of Container Corporation of India Ltd (BOM:531344) Q1 FY '25 Earnings Call
Q: The EXIM growth rate was only 3.3% year-on-year. What are your expectations for the future, given that you have kept the volume guidance unchanged?
A: Sanjay Swarup, Executive Chairman of the Board, Managing Director: The easing of the China to America circuit overloading and the softening of ocean freight will result in more availability of containers and vessels for India. This will boost export-import growth. Additionally, our market share in EXIM at Mundra and Pipavav ports has increased, and we expect further growth due to double-stack benefits for Nhava Sheva customers.
Q: Domestic realization and profitability have declined compared to the past three quarters. What is the reason behind this?
A: Sanjay Swarup, Executive Chairman of the Board, Managing Director: Despite a 15% growth in domestic, margins were maintained. We have identified circuits with return cargo, which will reduce empty running costs. Corrective steps have been taken, and we expect improved profit margins in the coming quarters.
Q: Can you expand on the initiatives with companies like Vedanta and Jindal?
A: Sanjay Swarup, Executive Chairman of the Board, Managing Director: We have long-term agreements with Vedanta and are in talks to extend it. These agreements ensure exclusivity, where all their business is given to CONCOR in exchange for assured supply of containers and rakes, along with special tariffs.
Q: What are the originating volumes for EXIM and domestic for the quarter?
A: Sanjay Swarup, Executive Chairman of the Board, Managing Director: Originating volume for EXIM is 4,81,912 TEUs, and for domestic, it is 1,24,844 TEUs, totaling 6,06,756 TEUs.
Q: What is the status of the bulk cement and tank containers initiative?
A: Sanjay Swarup, Executive Chairman of the Board, Managing Director: Bulk cement in tank containers will start contributing in Q3 as the containers are being manufactured. Other initiatives are already in progress, and results will be visible by the end of Q2.
Q: What is the impact of the GST exemption on services provided by the Railways to SPVs?
A: Manoj Dubey, Chief Financial Officer, Director - Finance, Executive Director: The GST exemption benefits SPVs like Angul Sukinda Railway, which is an SPV of CONCOR. This will positively impact our financials.
Q: Can you provide the rail freight margins for the quarter?
A: Sanjay Swarup, Executive Chairman of the Board, Managing Director: The rail freight margin for the quarter is 24.36%.
Q: What is the status of the connectivity of DFC to JNPT?
A: Sanjay Swarup, Executive Chairman of the Board, Managing Director: The Dedicated Freight Corridor (DFC) to Nhava Sheva is expected to be completed by March 2025, although this is a challenging target. We are providing double-stack benefits up to Varnama in the interim.
Q: What is the CapEx outlay for this year?
A: Sanjay Swarup, Executive Chairman of the Board, Managing Director: The CapEx budget for this financial year is INR 610 crores, with INR 156.6 crores already spent in Q1. We will review and potentially revise this budget mid-year.
Q: What is the status of the logistics app for first mile, last mile services?
A: Sanjay Swarup, Executive Chairman of the Board, Managing Director: The logistics app has been well received by customers. We are educating customers through trade meets and social media. The app is proving to be a significant facilitation measure.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
