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Strong business aided by its iconic position

CCRI reported healthy revenues in 4Q on the back of strong blended realization while volume growth was muted on account of 3% YoY degrowth in EXIM volumes which was offset by 17% growth in domestic volumes. During FY22, CCRI provided LLF of Rs4.65 (Vs Rs4,5bn estimated) owing to higher provisions. Management expects clarity on LLF in near terms which help to complete for proposed privatization. On the back of strong volume growth across both the segments, healthy market share gains and pickup in global trade, management has guided for a healthy ~12‐20% revenue/PAT growth for FY23E.

We are positive on CCRI’s prospects and believe that it is best positioned to capitalize on favorable infrastructure‐related tailwinds. We remain positive on the structural growth story considering 1) continual market share gains in domestic segment 2) strong EXIM volumes, and 3) new strategic initiatives. At CMP, the stock trades at a P/E of 24.3x/20.5x FY23E/FY24E earnings and at an EV of 14.6x/12.5x FY23E/FY24E EBITDA. We maintain a buy rating with a TP of Rs 755 valuing the company at a PE multiple of 20.5x on FY24E EPS, which is implying an upside of 31%.   

Result Highlights

* For Q4FY22, CCRI’s revenues grew 9.5% YoY to Rs20.4bn (in line with YSec estimate of Rs21bn), driven by growth in blended realizations to Rs19,116/TEUs (up 4.4% yoy).

* CCRI recorded marginal volume growth of 0.9% yoy to 10,68,721 TEUs in Q4FY22, primarily due to steady jump in domestic volumes of 17.7% to 235,858. EXIM volumes stood at 832,863 TEUs (de‐growth of 3% yoy).

* EBITDA grew 1x YoY to ~Rs4.1bn (below YSec ~Rs4.6bn and consensus estimate of Rs5.0bn) with EBITDAM witnessing an expansion of 1045bps YoY to 20.2% (below YSec 21.9% and consensus estimate of 23.8%). Margins came in better on account of price hikes and lower employee cost.

* Consequently, Adj PAT grew 20.4% YoY to Rs2.6bn (below YSec Rs3.3bn and consensus estimate of Rs5bn), mainly led by higher operating margins. Interest cost were high at Rs140mn, up 63%  

* At the CMP, the stock trades at a P/E of 24.3x and 20.5x its FY23E & FY24E earnings

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