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Transition phase continues

Container Corporation of India (CCRI IN) reported weak Q4FY26, impacted by geopolitical disruptions, weak movement in domestic cargo and pressure on realization due to lower lead distance and adverse cargo mix. Domestic profitability remained under pressure due to disruption in gunny bale traffic, weak movement of Morbi tile and elevated empty running costs from lack of return cargo from East India. EXIM performance was relatively stable with healthy import growth, improving double-stack movement and lower empty running, although overall market share moderated as CCRI avoided low-margin cargo. Management indicated that business trends improved from May, while WDFC connectivity to JNPT from June 2026 is expected to drive a modal shift from road to rail and support recovery in volume growth and profitability. The company has guided for ~8% EXIM growth, ~15% domestic growth and ~9.5% overall handling volume growth in FY27, while maintaining EBITDA margin guidance. We remain conservative on growth and retain Accumulate with a lower TP of INR 520 on 30x FY28E P/E. We introduce FY29E.

Profitability under pressure:

Standalone revenue declined 1.1% YoY to INR 22.6bn in Q4FY26, impacted by weak domestic cargo environment, disruption in gunny bag movement and lower tile traffic from Morbi, while EXIM business was relatively stable. EBITDA declined 3.0% YoY to INR 4.2bn, with EBITDA margin moderating 38bps YoY to 18.6%, primarily on higher empty running costs in domestic operations and elevated maintenance expense. PAT dropped 14.5% YoY to INR 2.6bn due to weak operating performance, and higher interest cost.

EXIM growth stable:

EXIM revenue remained broadly stable in Q4FY26 despite geopolitical disruptions, with originating volume at ~0.55mn TEU supported by healthy imports and traction in auto parts, reefer cargo and pharma logistics. Realization remained under pressure due to lower lead distance and softer cargo mix, while EXIM market share moderated to ~53.9% as the company avoided low-margin cargo. Operational efficiency remained healthy with ~27% reduction in EXIM empty running and ~1.5% YoY growth in double-stack rake movement to 6,396 rakes, supporting profitability. Rail coefficient at JNPT stood at ~15.1%, with management expecting improvement post WDFC connectivity from June 2026. Management guided for ~8% EXIM handling volumes growth in FY27, supported by DFC-led transit time improvement and a gradual modal shift from road to rail.

Retain Accumulate with a lower TP of INR 520:

With expected improvement in demand, capex intensity is likely to continue across rolling stock, containers and terminal infrastructure with planned investment of INR 9.5bn in FY27 vs INR 10.8bn YoY. Conservatively, we lower FY27E earnings by 12.5%, and FY28E earnings by 13%. So, we lower our TP to INR 520 (from INR 599) on unchanged 30x (unchanged) P/E. We introduce FY29E and factor in lower than guided volume growth of 8% for EXIM and 11% for domestic. Maintain Accumulate.

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