Container Corporation of India Limited — Q3 FY25 earnings call

Call held 31 Jan 2025

Management summary

Container Corpn. reported a strong Q3 FY25 with 11.6% throughput growth, driven by robust domestic performance and market share gains in EXIM. The company increased its FY25 capex target by 40% to ₹855 crores, reflecting a bullish outlook and plans for significant infrastructure expansion. Despite geopolitical challenges impacting EXIM realization, operating and PAT growth remained positive, and an interim dividend of ₹4.25 per share was declared.

Highlights

  • Q3 FY25 throughput growth of 11.6% over corresponding period, with EXIM growing 8% and domestic 24.7%.

  • Gained EXIM market share: 73 basis points Pan-India, 180 basis points at Mundra Port, and 278 basis points at Pipavav Port.

  • Rail freight margin increased by 15 basis points year-on-year from 25.61% to 25.76%.

  • Operating income grew by 4.23% and PAT grew by 3.6% despite geopolitical challenges.

  • Double stack rakes grew by 11.25% in 9 months (4,142 to 4,608 rakes).

  • Declared an interim dividend of ₹4.25 per share, bringing total interim dividend for FY25 to ₹9.50 (190% of par value).

Concerns

  • Realization in EXIM was down about 10% in Q3, attributed by management to volume drop due to supply chain disruptions, not pricing changes.

  • Geopolitical reasons and supply chain disruptions led to a small dip in volumes in December, though recovery is noted in January.

Key financials

2 periods

Headline

  • Throughput Growth (9-month)
    7.8%
  • Operating Income Growth
    4.2%
  • PAT Growth
    3.6%
  • Operating Margin
    30%
    YoY 0%
  • Rail Freight Margin
    25.8%
    YoY +0.15%

Q3

  • Throughput Growth
    11.6%

What they filed

Q1 FY27: revenue up 0.3%, net profit up 0.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue2,288 2,208 2,288 2,154 2,355 +3%2,308 +5%2,263 −1%2,160 +0%
EBITDA582 465 441 433 576 −1%514 +11%427 −3%444 +3%
Net profit366 367 300 267 380 +4%335 −9%264 −12%269 +1%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • EXIM (9-month)
    5% Growth5,25,812 TEUs Originating Volume9,75,243 TEUs Handling Volume₹89.7 Cr Empty Running Cost55.3% Market Share (Pan-India)
  • Domestic (9-month)
    7.8% Growth1,17,644 TEUs Originating Volume3,09,551 TEUs Handling Volume₹220.92 Cr Empty Running Cost58% Market Share1,317 kilometers Lead Distance
  • Total (9-month)
    ₹310.61 Cr Empty Running Cost56% Market Share
  • EXIM (Q3)
    8% Growth
  • Domestic (Q3)
    24.7% Growth
  • Land License Fee
    ₹71.95 Cr Q3 FY24₹89.42 Cr Q3 FY25

Capital allocation

high confidence
  • Capex ₹855 Cr Raised — robust demand and future demand outlook
    • Infrastructure creation (terminals, rakes, container fleets)
    • Procuring tank containers

    Previously planned ₹610 Cr

    And seeing into the demand, Board of Directors have decided that we will increase our capex by 40%. It was a capex budget for this financial year was INR610 crores. Out of which, already INR444 crores we have achieved. Now we have revised it upward 40% to INR855 crores that we will be spending by this year-end.
  • Dividend ₹4.25/share (interim)
    And I'm also happy to inform that we have declared an interim dividend of INR4.25 on share of par value INR5. So till now, we have declared a total interim dividend of INR9.50, which is 190% of the par value.

Guidance & targets

Capex

  • FY25 Capex Spend Capex · FY25 · High confidence ₹855 crores

    Previously ₹610 crores → ₹855 crores

    Now we have revised it upward 40% to INR855 crores that we will be spending by this year-end.

    — Sanjay Swarup

  • Capex Spend Capex · next 3 years · Medium confidence in the same range as FY25
    All I can say is, for the next 3 years also in the same range we will be spending.

    — Sanjay Swarup

Infrastructure

  • Number of Terminals Infrastructure · by 2028 · High confidence 80
    I'm happy to inform that by 2028, that is 3 years from now, we will be having 80 terminals.

    — Sanjay Swarup

  • Rakes Ownership Infrastructure · by 2028 · High confidence 500-plus
    we will be having 500-plus rakes ownership by CONCOR

    — Sanjay Swarup

  • Container Fleets Infrastructure · by 2028 · High confidence around 70,000
    and we will be having around 70,000 container fleets.

    — Sanjay Swarup

  • DFC Commissioning (JNPT) Infrastructure · by December 2025 · High confidence commissioned
    So even DFC has not been commissioned up to JNPT, it will be likely to be commissioned by December 2025.

    — Sanjay Swarup

Volume

  • TEUs Handling Target Volume · FY25 · High confidence 5 million TEUs
    And we are on the correct track to achieve the historic 5 million TEUs handling targets that we will be having in this financial year. I'm quite confident that we will be able to achieve 5 million TEUs, which will be the landmark for the company. First time we will be achieving that target.

    — Sanjay Swarup

Volume Growth

  • Q4 Volume Growth (EXIM & Domestic) Volume Growth · Q4 FY25 · Medium confidence double-digit growth
    But EXIM is also having double-digit growth in the month of January, which I'm quite confident is likely to continue up to March.

    — Sanjay Swarup

Land License Fee

  • FY25 LLF Land License Fee · FY25 · High confidence ₹350 crores
    We hope to close by INR350 crores in the current financial year.

    — Ajit Kumar Panda

  • LLF Growth Land License Fee · next financial year · High confidence 7% growth
    Yes. We are looking at some kind of some surrenders some adjustments. So let us say, right now, yes, 7% growth will be there in the next financial year.

    — Ajit Kumar Panda

What to watch in Q4 FY25

FY26 Guidance

next call
Current Not provided this quarter
Target Detailed FY26 guidance

Why it matters

Management deferred FY26 guidance to the next call, which will provide crucial insights into future growth and strategy.

But FY '26, let us wait for 2, 3 months more. I will give a guidance in my next call.

Risks & concerns

  • Geopolitical scenario and supply chain disruptions

    medium

    International supply chains are getting adversely affected, leading to kinetic vessel schedules and congestion at transhipment ports, causing a small dip in December volumes.

    Management acknowledged

  • Uncertainty with Gati Shakti for brownfield terminals

    low

    Management decided not to utilize Gati Shakti for brownfield terminals due to inherent uncertainties, opting for greenfield projects only.

    Management acknowledged

Q&A highlights

7 direct, 1 evasive
Confidence in FY25 Capex Spend Direct
We are quite confident of spending that much amount [INR 855 crores].

Analyst questioned the ability to spend the revised capex in the remaining two months of FY25, and management expressed high confidence.

Asked by Amit Dixit

Q4 Volume Growth Outlook Evasive
At this stage, I would not like to give any numbers, but all I can say is the -- both EXIM and domestic, domestic, of course, has done very well. They are experiencing double-digit growth. But EXIM is also having double-digit growth in the month of January, which I'm quite confident is likely to continue up to March.

Management declined to provide specific Q4 volume growth numbers but indicated strong double-digit growth trends continuing into March.

Asked by Amit Dixit

EXIM Realization Drop Direct
So the only reason is the drop in volumes. And there's no other reason that comes to my mind because lead is also our lead in EXIM, they just slightly dip, slight -- they've been 9 months, it has come down from 708 kilometers to 704, only 4-kilometer dip is there. Not much dip is there in the lead. So only the reason is drop in volumes.

Analyst sought clarification on the 10% EXIM realization drop, and management clarified it was purely due to lower volumes from supply chain disruptions, not pricing changes.

Asked by Lavina Quadros

Impact of DFC on Volume Growth Direct
Actually, whenever we make our assessment for the forecast, what will be for 3 to 5 years, we have to take DFC into picture. Without DFC, making a forecast will not be realistic because DFC is coming in 1 year.

Analyst inquired about organic volume growth without DFC, and management emphasized that DFC's imminent commissioning makes it a critical factor for future forecasts.

Asked by Lavina Quadros

Domestic Realization Increase Direct
Basically, it is because of the reduction in empty running in domestic. We are getting very good circuits and traffic on both the sides. And our domestic team has worked very hard. And one very good initiative that we took was, the containers which were coming -- running empty in empty direction, we have given very competitive rates so that at least we get some money.

Analyst asked about the significant QoQ increase in domestic realization, and management attributed it to improved empty running efficiency and competitive pricing.

Asked by Achal Lohade

Gati Shakti for Brownfield Terminals Direct
At present, our management has taken a decision that we will not be going for that option because there is a lot of uncertainty involved in. If Brownfield terminals are migrating to Gati Shakti, then there is a big element of uncertainty. So we have decided that we will not be using that facility provided by Indian Railways, but for Greenfield projects we are going for Gati Shakti only.

Analyst asked about potential LLF savings from using Gati Shakti for TKD, and management clarified their strategy to avoid Gati Shakti for brownfield projects due to uncertainties.

Asked by Priyankar Biswas

EBITDA per TEU Calculation Direct
No, you should take the originating volume actually that is the clear indicator because handling if we do double stack, then the same containers can manage two times. So I would request you to take the originating numbers, then it will not be so much drop.

Analyst noted a drop in EBITDA per TEU, and management advised using originating TEUs instead of handling TEUs for a more accurate reflection.

Asked by Prateek Maheshwari

Domestic Handling vs. Originating Volume Growth Direct
Actually, in handling you know that some of the containers volumes we have taken from our PFTs, whatever PFT rakes we are handling. We have taken those volumes also. So that is the reason that the handling figure has gone up very sharply. And the originating is only TEU volumes whatever we are doing. So that is the main reason.

Analyst questioned the disparity between domestic handling (25%) and originating (7%) volume growth, and management explained it by including PFT rakes in handling volumes.

Asked by Vaibhav Shah

2 min read 6 chapters

Detailed narrative

Q3 FY25 Performance Overview

Container Corpn. reported a robust Q3 FY25 with a throughput growth of 11.6% over the corresponding period, driven by an 8% growth in EXIM and a significant 24.7% growth in the domestic segment. For the 9-month period ending December 31, 2024, overall throughput grew by 7.8%, with EXIM at 5% and domestic at 7.8%. This performance was achieved despite international supply chain disruptions and geopolitical challenges, which caused a small dip in volumes in December, though January saw a recovery with double-digit growth.

Market Share and Operational Efficiency

The company successfully gained EXIM market share, increasing by 73 basis points on a Pan-India basis, 180 basis points at Mundra Port, and 278 basis points at Pipavav Port. This was achieved without sacrificing margins, as the rail freight margin increased by 15 basis points year-on-year from 25.61% to 25.76%. Operating margin remained flat year-on-year at over 30%, reflecting operational excellence and customer-centricity. Domestic realization also saw an increase, attributed to better empty running management and competitive rates.

Infrastructure Expansion and Capex Plans

The Board of Directors revised the FY25 capex budget upwards by 40% to ₹855 crores from the initial ₹610 crores, with ₹444 crores already spent by December 31, 2024. The company aims for massive infrastructure creation, targeting 80 terminals, over 500 rakes, and around 70,000 container fleets by 2028. This includes procuring 1,000 tank containers, with supplies already beginning, to cater to the growing demand, particularly in bulk cement logistics.

Strategic Initiatives and Growth Drivers

Key growth drivers include the increased use of double-stack rakes, which grew by 11.25% in the 9-month period. New services like double-stack space from Nhava Sheva to MMLP Varnama (near Baroda) and new rail services at Gangavaram port have been initiated, showing promising volumes. The company is also focusing on long-term agreements with corporate customers and shipping lines, and expects the Dedicated Freight Corridor (DFC) to be a game-changer, with JNPT DFC commissioning expected by December 2025.

Financial Performance and Shareholder Returns

Operating income grew by 4.23%, and Profit After Tax (PAT) increased by 3.6% despite the challenging geopolitical environment. The company declared an interim dividend of ₹4.25 per share (on a par value of ₹5), bringing the total interim dividend for FY25 to ₹9.50, which is 190% of the par value. Management is confident in achieving the historic 5 million TEUs handling target for FY25.

Land License Fee and Depreciation

The land license fee (LLF) for Q3 FY25 was ₹89.42 crores, up from ₹71.95 crores in Q3 FY24, with a target of ₹350 crores for FY25. Management expects a 7% annual escalation in LLF for the next financial year but is actively exploring options to contain this increase. Depreciation saw a reduction of ₹25 crores in Q3, primarily due to a change in the useful life of wagons, impacting the 9-month period by ₹79 crores and resulting in a ₹12.5 crores reduction in wagon depreciation for Q3.

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