Shares of Container Corporation of India Ltd (Concor) out of place about 3% in Monday’s trade after the keep watch over warned a couple of steep fall in business volumes in provide fiscal FY21.

Revenues in March quarter (This autumn FY20) dropped 10% reflecting a 3.85% fall in business volumes. But as a result of lower rail freight charges and expenditure, operating source of revenue grew thru an excellent 24%. Profit margins expanded 8.4 proportion problems growth to 30%, exceeding Street estimates.

The keep watch over has warned that business volumes would possibly simply fall 20% in provide fiscal.

Market share advisable houses are helping railways mitigate the affect of sharp slowdown in container trade. The fall in export-import (Exim) container rail trade, where Concor is {the marketplace} leader, is especially slower than the fall in container volumes at major ports in April and May. Still, the keep watch over guided for a sharp fall in business volumes.

“Management has guided for 20% amount decline in FY21, which seems very cautious. Based on Indian Railways wisdom, our review is ~15% amount decline,” analysts at Edelweiss Securities Ltd mentioned in a understand.

Perhaps, the cautious observation underscores the inclined outlook for Exim trade. Some fear prolonged restrictions on town centres and monetary slowdown would possibly crimp trade volumes.

“Management mentioned that, even supposing ports and logistics were helpful right through the lockdown, there can be an affect as shoppers don’t have any longer necessarily taken neatly timed offtake given inclined name for and in addition a lack of freeway transportation for last-mile connectivity,” analysts at Jefferies India Pvt. Ltd said in a note. “Guidance is based on an expectation that India’s export-import trade is likely to be down 30% YoY in FY21E, and Concor will outperform the market as rail gains some share from roads.”

Rising costs is together with to the worries of the company. Indian Railways revised the amount it charges Concor for the use of its land for terminals. According to analysts the revised protection pegs the Concor’s annual fee liabiloty at 450 crore in opposition to 150 crore in FY20.

Many fear the sharp rise in land license fee in a inclined business amount setting can adversely affect Concor’s operating leverage negating one of the vital an important March quarter’s margin advisable houses. “While we adore Concor’s market control (the biggest beneficiary of the upcoming faithful freight corridor), we are constrained thru its dear valuation (14.2x FY22E EV/EBITDA) amid macro headwinds and inclined profitability,” analysts at JM Financial Institutional Securities Ltd mentioned in a understand.

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