Concor's revenue in Q3 FY23 jumped to Rs 1,988 crore, up 3.6 percent YoY. (Representative image)
Container Corporation of India (Concor) said that its plans to spend around Rs 600 crore as capital expenditure in 2022-23 were hit due to geopolitical scenarios such as India's relationship with China.
"We were unable to source rolling stock, containers, and rakes due to ban on imports from China, which has limited our capital expenditure in 2022-23," V Kalyana Rama, chairman and managing director of Concor said in a post-earnings conference call on January 24.
He added that till now Concor has spent Rs 220 crore as capex in 2022-23. Rama added that capital expenditure in 2023-24 is likely to be higher than in 2022-23 as the company will start procuring rolling stock, containers, and rakes next year.
Rama added that Concor is not looking to move its 26 terminals to the new licensing policy approved by the government in September 2022.
He added that in order to adopt the new land leasing policy, CONCOR will be required to surrender its terminals and subject them to bidding which the organisation is not keen on.
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Rama also said that Concor has lost market share in the export-import cargo segment, especially from Mundra Port in 2022-23.
He added that Concor has come out with a discount scheme to gain back its lost market share and has reported a rise in market share from Mundra Port in December.
"We have launched a one-plus-one scheme on the import side in Mundra Port," Rama said.
Speaking on a fall in Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) margins, Rama said that Concor's margins have fallen due to an increase in empty running costs and the Indian Railway's withdrawing discounts.
The company's empty running cost stood at Rs 37 crore for EXIM market in October-December and Rs 97 crore for the domestic market, Rama said.
He added that Concor is aiming to run 4,000 double-stack trains in 2022-23, up from 3,750 it ran in 2021-22.
Concor currently pays land lease charges at the rate of 6 percent per annum on the market value of industrial land with annual escalation of 7 percent, for terminals run on railway land.
Last year, the Unions Cabinet approved a policy under which land lease charges would be levied at 1.5 percent of the market value of land per annum with annual escalation of 6 percent.
Concor currently runs 61 inland container depots (ICDs) of which 26 terminals are built on land leased from Indian Railways (IR). These 26 terminals account for more than half of the annual revenue of the company.
Concor reported a 3.5 percent on-year rise in its net proft in the third quarter of fiscal year 2022-23 to Rs 296.5 crore.
Concor's revenue climbed by 3.6 percent during the third quarter, rising from Rs 1,920 crore in the year-ago period to Rs 1,988.4 crore. The numbers were also higher sequentially, as the revenue in the September 2022 quarter was Rs 1,970.6 crore.
Despite showing growth in profit Concor's shares lost over 2 percent in the morning session on January 24, a day after the company declared its third-quarter earnings.
Global research firm Nomura has a 'buy' rating on the stock with a target of Rs 895 per share, an upside of over 31 percent from the current market price. It is of the view that Q3 revenue and EBITDA missed estimates, but EXIM profitability and LLF were largely in line.
"Sales was a miss as realisations, especially EXIM, were below estimates. EBITDA margin miss was largely led by weakness in domestic profitability. We await management commentary on weak domestic profitability and market share loss and any update on divestment," the brokerage firm said.