CONCOR rallies 10% on strong revenue performance in Q4

Shares of Container Corporation of India (CONCOR), on Monday, hit a 52-week high of Rs 644.95 after rallying 10 per cent on the BSE in intra-day trade on the back of heavy volumes after the company said its board has accorded in-principle approval for exploring the possibility of borrowings an amount not exceeding Rs 3,500 crore by the company from any bank(s)/ corporate(s) and institution(s) towards executing long term lease agreement(s) for Railway Land(s).

For the January-March quarter (Q4FY21), the company reported a healthy 24 per cent year on year (YoY) growth in standalone revenues at Rs 1,939 crore, led by volume growth of 13 per cent (1.06 million Twenty Foot equivalent units or TeUs). The company however, reported contraction in margins (down 2050 basis points (bps)) to 9.7 per cent, led by higher payment of Land License Fee (LLF) charges (6 per cent on the value of land) by CONCOR.

Till the financial year 2019-20, CONCOR has been paying LLF to the Railways on the railway land leased to it on the basis of number of Twenty Foot equivalent units (TEUs) handled. Ministry of Railways, Government of India vide its order no.2015/LML-II/ 13/4 dated 19.03.2020, had communicated that the LLF applicable on the Railway land leased to CONCOR shall now be charged w.e.f. 01.04.2020 as per extant policy of Railways i.e. @6 per cent of the value of land, which will be further increased 7 per cent annually.

Accordingly, as per the company assessment, an amount of Rs 517.39 crore has been paid as Land License fee to Indian Railways in current financial year as per extant policy of Railways, the company said in notes of accounts.

Although strong revenue performance was impacted by the higher LLF charges in FY21, going forward, the Finance Ministry has proposed to the Union Cabinet to ease the LLF charges from 6 per cent to 3 per cent, to ease CONCOR divestment. The expected lowering of charges along-with few surrenders of non-performing terminals and higher efficiencies (due to DFC), is expected to positively impact EBITDA in FY22E and FY23E.