Container Corporation of India reported quarterly results that were significantly below expectations due to higher rail freight expenses and rebates that reduced margins in the important EXIM business. EXIM revenues grew over the previous year but margins fell sharply due to an inability to fully pass on rail freight cost increases. The analyst downgraded the stock to Reduce based on the weak EXIM performance and concerns about declining market share for Container Corporation in that business over the long run.

1. 4QFY2010 Result Update
April 28, 2010
Container Corporation of India REDUCE
CMP Rs1,311
Performance Highlights Target Price Rs1,194
Container Corporation of India’s (Concor) 4QFY2010 results were Investment Period 12 Months
significantly below our expectations as higher rail freight expenses and
rebates pulled down its Exim performance. Further, it was unable to pass on Stock Info
entire hike of haulage charges in 4QFY2010. Consequently, margins of the
Sector Logistics
Exim business fell by 482bp yoy and 636bp qoq to 22.1% and were the
lowest since FY2004. The Domestic business continued to perform well on the Market Cap (Rs cr) 17,034
back of the strong revival in domestic consumption that has picked up the
Beta 0.3
slack in EXIM performance. We are downgrading the stock from Neutral to
Reduce on account of the weak Exim performance registered in the quarter 52 WK High / Low 1,500/755
under review.
Avg. Daily Volume 16,328
Exim performance drags down performance: Concor reported 13.1% yoy and
Face Value (Rs) 10
7.5% qoq growth in Revenues to Rs951cr, which was in line with our estimate.
The company’s Exim Revenues grew 14.1% yoy and 8.0% qoq to Rs726cr on BSE Sensex 17,380
robust Volume growth of 23.6% at JNPT. Domestic Revenues grew 9.9% yoy
Nifty 5,212
and 5.8% qoq to Rs225cr, marginally above our expectation. Overall EBIDTA
Margin came in much below our estimate of 28.7% at 23.2%. Margins of the Reuters Code CCRI.BO
Exim business fell by 482bp yoy and 636bp qoq to 22.1% on account of
higher rail freight expenses, and were the lowest since FY2004. However, Bloomberg Code CCRI@IN
Margins of the Domestic Segment were flat yoy and 238bp lower qoq in line Shareholding Pattern (%)
with our estimate. Other Income fell by 24.4% yoy to Rs38.3cr on account of
lower yield earned on free cash. Consequently, PAT declined 8.2% yoy and Promoters 63.1
13.9% qoq to Rs172.7cr, which was significantly below our estimate of MF/Banks/Indian FIs 10.1
Rs213cr.
FII/NRIs/OCBs 25.7
Outlook and Valuation: We revise our FY2011E and FY2012E Earnings
estimates by 12.6% and 14.3% respectively, due to the weak Exim Indian Public 1.1
performance in 4QFY2010. During FY2006-10, Concor conceded market Abs. (%) 3m 1yr 3yr
share by 630bp to the Private players and Road Segment. The key risk to our
recommendation will be Concor maintaining its market share and accelerated Sensex 6.6 58.0 25.0
construction of the dedicated Rail-freight corridor, which could help it wrest
market share from the Road Segment. At the current market price, Concor is Concor 8.3 72.4 30.0
trading at 18.6x FY2012E Earnings, which is at the higher end of its historical
P/E band, and at 12.8x FY2012E EV/EBITDA. Further, we expect the
company’s falling market share to be a drag on its Exim performance. Hence,
we downgrade the stock from Neutral to Reduce.
Key Financials
Y/E March (Rs cr) FY2009 FY2010E FY2011E FY2012E
Net Sales 3,452 3,702 4,003 4,522
% chg 2.6 7.2 8.1 13.0
Net Profit 779.2 778.6 823.0 913.5
% chg 6.1 (0.1) 5.7 11.0
FDEPS (Rs) 59.9 59.9 63.3 70.3
EBITDA Margin (%) 26.8 26.4 26.0 25.3
Param Desai
P/E (x) 21.9 21.9 20.7 18.6
Tel: 022 – 4040 3800 Ext: 310
RoE (%) 22.6 19.4 18.1 17.7
E-mail: paramv.desai@angeltrade.com
RoCE (%) 18.9 17.4 16.6 16.5
P/BV (x) 4.9 4.3 3.7 3.3
Mihir Salot
EV/Sales (x) 4.4 4.1 3.7 3.2
Tel: 022 – 4040 3800 Ext: 307
EV/EBITDA (x) 16.5 15.4 14.3 12.8
E-mail: mihirr.salot@angeltrade.com
Source: Company, Angel Research
1
Please refer to important disclosures at the end of this report Sebi Registration No: INB 010996539

2. Concor I 4QFY2010 Result Update
Exhibit 1: 4QFY2010 Performance
Y/E March (Rs cr) 4QFY2010 4QFY2009 %yoy FY2010 FY2009 %yoy
Net Sales 951 841 13.1 3,702 3,452 7.2
Total expenditure 730 618 18.3 2,726 2,526 7.9
Operating Profit 220 223 (1.3) 976 927 5.3
OPM (%) 23.2 26.5 (337bp) 26.4 26.8 (47bp)
Depreciation 36 31 16.3 134 120 12.3
Other income 38 51 (24.4) 162 207 (21.9)
Profit Before Tax 222 242 (8.4) 1,004 1,014 (1.0)
Tax 49 54 (9.0) 225 235 (4.2)
Tax rate (%) 22.2 22.3 (14bp) 22.4 23.1 (73bp)
Reported PAT 173 188 (8.2) 779 779 (0.1)
PAT Margin (%) 18.2 22.4 (422bp) 21.0 22.6 (155bp)
EPS (Rs) 15.7 17.2 (8.7) 59.9 60.0 (0.1)
Source: Company, Angel Research
Pick up in Exim Volumes on low base
In 4QFY2010, Concor’s Exim Volumes grew 19.6% yoy as against 23.6% and
25.4% growth at JNPT and major ports, respectively. The higher growth was
primarily on account of low base and improving economy. Going forward, we
expect Concor to report 10% yoy growth in Exim Volumes over FY2010-12E.
Domestic Volumes continued to perform well on account of the strong revival in
domestic consumption, which grew 15.8% yoy and 6.7% qoq. Management has
indicated the strong momentum to continue in the Domestic Segment.
Exhibit 2: Quarterly Volume Growth Trend
40.0
30.0 31.3
20.0 18.8 19.6
15.8
10.0 10.4
(%)
5.2
5.6
1.0 1.9
0.0
(6.6) (5.6) (2.5) (2.6)
(10.0)
(8.8)
(10.3)
(17.0)
(20.0)
1QFY2009 2QFY2009 3QFY2009 4QFY2009 1QFY2010 2QFY2010 3QFY2010 4QFY2010
Exim yoy growth Domestic yoy growth
Source: Company, Angel Research
Lower empties fail to negate Rebate, higher Rail Freight charges
Overall EBIDTA Margin came in below our estimate of 28.7% at 23.2%. Margins of
the Exim business fell by 482bp yoy and 636bp qoq to 22.1% on account of higher
rail freight expenses and rebates given to customer to garner volumes. Rail freight
expenses and other expenditure increased 18.1% yoy and 20.5% yoy to Rs557cr and
Rs154cr respectively, on account of inability to pass on entire hike and rebates of
~Rs27cr largely provided in 4QFY2010. However, Empties’ running costs during the
quarter fell 21% yoy to Rs17.4cr, which aided the Margins to a certain extent.
April 28, 2010 2

3. Concor I 4QFY2010 Result Update
Exhibit 3: Segmental Performance
(Rs cr) 3QFY10 4QFY09 4QFY10 %yoy %qoq
Revenues 884 841 951 13.1 7.5
EXIM 672 636 726 14.1 8.0
Domestic 213 205 225 9.9 5.8
Volumes-mn TEU 595,525 541,752 643,115 18.7 8.0
EXIM 452,623 410,114 490,681 19.6 8.4
Domestic 142,902 131,638 152,434 15.8 6.7
EBIT 230 204 196 (3.6) (14.7)
EXIM 191 171 160 (6.3) (16.1)
Domestic 39 33 36 10.9 (7.9)
EBIT Margin (%) 26.0 24.2 20.7 (357bp) (538bp)
EXIM 28.4 26.9 22.1 (482bp) (636bp)
Domestic 18.5 15.9 16.1 15bp (238bp)
Realisation/TEU 14,852 15,516 1,4780 (4.7) (0.5)
EXIM 14,843 15,507 14,789 (4.6) (0.4)
Domestic 14,879 15,542 14,752 (5.1) (0.9)
Source: Company Angel Research
Deteriorating Exim market share remains a concern
Concor is in a commanding position owing to its mammoth infrastructure - 225
rakes and 59 terminals - built over 20 years. The company plans to add another
40-45 rakes and four terminals over FY2010-12E. Currently, the company is the
preferred transporter via Rail among the shipping lines on account of being the
lowest-cost service provider in the Segment and due to the strategic location of its
container depots. However, during FY2006-10, Concor conceded market share by
620bp to 27.4% from its peak of 33.7% to the Road Segment and Private players.
Concor was impacted by higher IR tariffs and opening up of Rail containerisation to
the Private players in FY2007. Going ahead too, we expect Concor to record further
drop in market share to around 25% over the next four-five years on the back of
higher haulage charges, which would render it uncompetitive in the FEU Segment,
and the Private players would gradually increase their presence.
Exhibit 4: Declining Exim Market share Exhibit 5: Declining Operating Margins
8,000 35.0 35
33.7
7,000 32.5
32.1
31.0 32.0 32 31.5
6,000 30.7
29.5
5,000 29.0 29.1
28.2
(000' TEU)
27.4 28.7
29
(%)
4,000
(%)
26.8
3,000 26.0 26.1 26.4
26
2,000
23.0
1,000
23
0 20.0
FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010
20
Container traffic at major ports (LHS) Concor market share (RHS) FY2005 FY2006 FY2007 FY2008 FY2009 FY2010
Source: IPA, Angel Research Source: Company, Angel Research
April 28, 2010 3

4. Concor I 4QFY2010 Result Update
Outlook and Valuation
Concor is gradually losing its pricing power in the Exim Segment, which could be at
further threat once more Rail-linked ICDs from the Private players come up. We
remain bullish on the Container Sector in the long term, which is the core driver of
Concor's business. However, higher IR tariffs and opening up of the Container
industry to the Private players will impact the company’s market share in the longer
term. We also believe that the company’s growth trajectory will be lower than the
historical trend. The key risk to our recommendation will be Concor maintaining its
market share and accelerated construction of the dedicated Rail-freight corridor,
which could help it wrest market share from the Road Segment.
Exhibit 6: Revised Estimates
Revenue EBIDTA EPS Revenue EBIDTA EPS
Particulars
(Rs cr) (Rs cr) (Rs) % chg % chg % chg
FY11E 4,003 1,041 63.3 (5.8) (11.9) (12.6)
FY12E 4,522 1,144 70.3 (6.6) (13.1) (14.3)
We have revised downwards our FY2011E and FY2012E Earnings estimates by
12.6% and 14.3% respectively, on account of the weak Exim performance in the
quarter under review. Thus, we estimate Concor to post muted Earnings CAGR of
8.3% over FY2010-12E, as against the 17.6% CAGR registered during FY2005-09.
At the current market price, Concor is trading at 18.6x FY2012E Earnings, which is
at the higher end of its historical P/E band, and at 12.8x FY2012E EV/EBITDA.
Hence, we downgrade the stock from Neutral to Reduce, with a Target Price of
Rs1,194 (17x FY2012E EPS).
Exhibit 7: 1-year forward P/E
25
20 Trading at premium to
its five yr average
15
(x)
10
5
0
Jul-05
Jan-06
Jul-06
Jan-07
Jul-07
Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Apr-05
Apr-06
Apr-07
Apr-08
Apr-09
Apr-10
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
P/E Average
Source: Bloomberg, Angel Research
April 28, 2010 4

5. Concor I 4QFY2010 Result Update
Profit & Loss Statement (Consolidated) (Rs cr)
Y/E March FY2007 FY2008 FY2009 FY2010E FY2011E FY2012E
Gross sales 3,062 3,364 3,452 3,702 4,003 4,522
Less: Excise duty - - - - - -
Net Sales 3,062 3,364 3,452 3,702 4,003 4,522
Other operating income - - - - - -
Total operating income 3,062 3,364 3,452 3,702 4,003 4,522
% chg 26.4 9.8 2.6 7.2 8.1 13.0
Total Expenditure 2,171 2,487 2,526 2,726 2,962 3,378
Terminal & other Service
Charges 2,033 2,320 2,286 2,462 2,662 3,020
Other Expenses 101 111 157 185 216 262
Personnel 37 56 83 79 84 95
Other - - - - - -
EBITDA 891 876 927 976 1,041 1,144
% chg 29.1 (1.6) 5.8 5.3 6.6 9.9
(% of Net Sales) 29.1 26.1 26.8 26.4 26.0 25.3
Depreciation&
Amortisation 93.7 108.6 119.5 134.3 144.9 148.4
EBIT 797 768 807 842 896 996
% chg 29.8 (3.7) 5.1 4.3 6.4 11.1
(% of Net Sales) 26.0 22.8 23.4 22.7 22.4 22.0
Interest & other Charges - 3 4 - - -
Other Income 85 165 211 162 166 183
(% of PBT) 9.6 17.8 20.8 16.1 15.6 15.5
Recurring PBT 882 930 1,014 1,004 1,062 1,179
% chg 31.6 5.5 9.0 (1.0) 5.8 11.0
Extraordinary
Expense/(Inc.) - - - - - -
PBT (reported) 882 930 1,014 1,004 1,062 1,179
Tax 186 198 235 225 239 265
(% of PBT) 21.1 21.3 23.1 22.4 22.5 22.5
PAT (reported) 696 732 779 779 823 913
Tax Adjustments of prior
period 8.1 1.9 (0.5) - - -
Minority Interest - - - - - -
Prior period items (0.4) (0.2) 0.2 - - -
PAT after MI (reported) 696 732 779 779 823 913
ADJ. PAT 704 734 779 779 823 913
% chg 33.8 4.3 6.1 (0.1) 5.7 11.0
(% of Net Sales) 23.0 21.8 22.6 21.0 20.6 20.2
Basic EPS (Rs) 108 56 60 60 63 70
Fully Diluted EPS (Rs) 54 56 60 60 63 70
% chg 33.8 4.3 6.1 (0.1) 5.7 11.0
April 28, 2010 5

6. Concor I 4QFY2010 Result Update
Balance Sheet (Consolidated) (Rs cr)
Y/E March FY2007 FY2008 FY2009 FY2010E FY2011E FY2012E
SOURCES OF FUNDS
Equity Share Capital 65 130 130 130 130 130
Preference Capital - - - - - -
Reserves& Surplus 2,565 3,036 3,602 4,159 4,734 5,374
Shareholders Funds 2,630 3,166 3,732 4,289 4,864 5,504
Minority Interest - - - - - -
Total Loans 30 50 49 49 49 49
Deferred Tax Liability 161 174 194 194 194 194
Total Liabilities 2,821 3,390 3,974 4,531 5,107 5,746
APPLICATION OF FUNDS
Gross Block 2,025 2,327 2,722 3,122 3,622 4,122
Less: Acc. Depreciation 474 581 698 832 977 1,125
Net Block 1,552 1,746 2,025 2,290 2,645 2,997
Capital Work-in-Progress 257 172 246 246 246 246
Goodwill - - - - - -
Investments 97 120 168 168 168 168
Current Assets 1,384 1,900 2,159 2,401 2,652 2,985
Cash 1,078 1,523 1,767 2,004 2,210 2,500
Loans & Advances 271 282 276 292 322 371
Other 36 95 116 105 119 113
Current Liab. & Prov. 468 549 623 573 605 649
Net Current Assets 916 1,351 1,536 1,827 2,047 2,335
Misc. Exp. not written off 0 0 0 0 0 0
Total Assets 2,821 3,390 3,974 4,531 5,107 5,746
Cash Flow Statement (Consolidated) (Rs cr)
Y/E March FY2007 FY2008 FY2009 FY2010E FY2011E FY2012E
Profit before tax 882 930 1,014 1,004 1,062 1,179
Depreciation 94 109 120 134 145 148
Change in Working Capital 73 (14) 39 (43) (27) (11)
Less: Other Adjustments (70) (136) (175) - - -
Direct taxes paid (225) (191) (204) (225) (239) (265)
Cash Flow from Operations 753 697 793 870 941 1,051
(Inc.)/ Dec. in Fixed Assets (234) (303) (388) (400) (500) (500)
(Inc)./ Dec. in Investments (2) (24) (48) - - -
(Inc)./ Dec. in loans and
advances (91) 85 (74) - - -
Other income 72 139 172 - - -
Cash Flow from Investing (256) (102) (338) (400) (500) (500)
Issue of Equity - - - - - -
Inc./(Dec). in loans 30 20 (2) - - -
Dividend Paid (Incl. Tax) (141) (167) (205) (232) (235) (261)
Others - (3) (4) - - -
Cash Flow from Financing (111) (150) (211) (232) (235) (261)
Inc./(Dec.) in Cash 386 445 244 237 206 290
Opening Cash balances 691 1,078 1,523 1,767 2,004 2,210
Closing Cash balances 1,078 1,523 1,767 2,004 2,210 2,500
April 28, 2010 6

7. Concor I 4QFY2010 Result Update
Key Ratios
Y/E March FY2007 FY2008 FY2009 FY2010E FY2011E FY2012E
Valuation Ratio (x)
P/E (on FDEPS) 24.2 23.2 21.9 21.9 20.7 18.6
P/CEPS 21.1 19.9 18.5 18.7 17.6 16.0
P/BV 7.2 5.9 4.9 4.2 3.7 3.3
Dividend yield (%) 6.5 5.4 4.6 4.0 3.5 3.1
EV/Sales 5.2 4.6 4.4 4.1 3.7 3.2
EV/EBITDA 17.9 17.8 16.5 15.4 14.3 12.7
EV / Total Assets 4.9 3.9 3.3 3.0 2.6 2.3
Per Share Data (Rs)
EPS (Basic) 108.3 56.5 59.9 59.9 63.3 70.3
EPS (fully diluted) 54.1 56.5 59.9 59.9 63.3 70.3
Cash EPS 62.1 65.7 70.7 70.2 74.5 81.7
DPS 11.0 13.0 14.0 17.0 19.0 21.0
Book Value 202.3 243.5 287.1 330.0 374.2 423.4
Dupont Analysis
EBIT margin 26.0 22.8 23.4 22.7 22.4 22.0
Tax retention ratio 0.8 0.8 0.8 0.8 0.8 0.8
Asset turnover (x) 1.5 1.5 1.3 1.2 1.2 1.2
ROIC (Post-tax) 30.7 26.1 23.7 22.0 21.0 20.9
Cost of Debt (Post Tax) - 0.0 0.1 - - -
Leverage (x) (0.3) (0.4) (0.4) (0.4) (0.4) (0.4)
Operating ROE 20.4 15.7 13.6 12.6 12.1 12.1
Returns (%)
ROCE (Pre-tax) 27.1 21.2 18.9 17.4 16.6 16.4
Angel ROIC (Pre-tax) 43.4 36.6 33.4 31.0 29.3 28.8
ROE 29.8 25.3 22.6 19.4 18.0 17.6
Turnover ratios (x)
Asset Turnover (Gross Block) 1.6 1.5 1.4 1.3 1.2 1.2
Inventory / Sales (days) 0.6 1.1 1.8 1.8 1.7 1.7
Receivables (days) 1.1 1.4 2.0 1.5 1.5 1.5
Payables (days) 56.7 59.0 65.7 62.1 55.9 51.7
Working capital cycle (ex-cash)
(days) (18.5) (18.1) (21.2) (20.1) (15.5) (13.2)
Solvency ratios (x)
Net debt to equity (0.4) (0.5) (0.5) (0.5) (0.4) (0.4)
Net debt to EBITDA (1.2) (1.7) (1.9) (2.0) (2.1) (2.1)
Interest Coverage (EBIT / Int.) - 301.1 191.3 - - -
April 28, 2010 7

8. Concor I 4QFY2010 Result Update
Research Team Tel: 022-4040 3800 E-mail: research@angeltrade.com Website: www.angeltrade.com
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Disclosure of Interest Statement Container Corporation of India
1. Analyst ownership of the stock No
2. Angel and its Group companies ownership of the stock No
3. Angel and its Group companies’ Directors ownership of the stock No
4. Broking relationship with company covered No
Note: We have not considered any Exposure below Rs 1 lakh for Angel and its Group companies.
Address: Acme Plaza, ‘A’ Wing, 3rd Floor, M.V. Road, Opp. Sangam Cinema, Andheri (E), Mumbai - 400 059.
Tel : (022) 3952 4568 / 4040 3800
Angel Broking Ltd: BSE Sebi Regn No : INB 010996539 / CDSL Regn No: IN - DP - CDSL - 234 - 2004 / PMS Regn Code: PM/INP000001546 Angel Securities Ltd:BSE: INB010994639/INF010994639 NSE:
INB230994635/INF230994635 Membership numbers: BSE 028/NSE:09946
Angel Capital & Debt Market Ltd: INB 231279838 / NSE FNO: INF 231279838 / NSE Member code -12798 Angel Commodities Broking (P) Ltd: MCX Member ID: 12685 / FMC Regn No: MCX / TCM /
CORP / 0037 NCDEX : Member ID 00220 / FMC Regn No: NCDEX / TCM / CORP / 0302
April 28, 2010 8