Container Corporation of India Limited (CONCOR.BO) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Container Corporation of India Limited Q3 FY '26 Earnings Conference Call hosted by DAM Capital Advisors Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Kunal Shah from DAM Capital. Thank you, and over to you, sir.

Yes. Hi, everyone. Welcome to the 3Q F '26 Earnings Call of Container Corporation of India. We have the management being represented by Mr. Sanjay Swarup, Chairman and Managing Director. At this point, I'd like to hand over the call to the management for their opening remarks, post which we can take up the Q&A. Thanks, and over to you, sir.

Good morning to all of you. I'm Sanjay Swarup, CMD of Container Corporation. I am joined by my Directors, Shri Ajit Kumar Panda, Director, Projects and Services; Mr. Vijoy Kumar Singh, Director, International Marketing and Operations; Mr. Mohammad Azhar Shams, Director, Domestic; and Mr. Harish Chandra, Principal Executive Director, Finance, Company Secretary and CFO. So I would like to give some opening remarks. After that, we can go for question-and-answer session. At the outset, I am glad to announce that Board of Directors have approved a dividend of INR 3.40 on share of INR 5 par value. That is 68% in its meeting concluded yesterday. So till now, the total dividend for this FY that has been given to shareholders is INR 7.60, which is 152%. Second point is the throughput. Throughput, we have achieved a throughput of 4.15 million TEUs in the period ending December 2025, which is ever highest in the company's history. Throughput growth has been around 11%, in which EXIM has increased by 10% and domestic has shown a growth of 13%. And it quite aligns with the -- in fact, it is better than the India's international trade merchandise growth also, in which exports have shown a growth of 2.4%, which is USD 330.3 billion, and imports have shown a growth of 6% at USD 578.6 billion for the first 9 months of this financial year. Domestic, there has been less growth as we had projected. We had projected 20% growth, whereas we have achieved around 13%. The primary reasons for this is that we have not picked up the low-margin business in domestic. Second is that the tank containers, which we were thinking that in Q3, we will get a good supply, but somehow it got delayed during manufacturing. And now in Q4, we are getting supply of tank containers and domestic loading is picking up now. And there has been less demand of gunny bales also because of the disturbances in Bangladesh. As far as market share is concerned, we increased our market share at JNPT by 186 basis points and at Pipavav port by 93 basis points. And in Mundra, our market share went down by 232 basis points. And the good thing is that we increased the market share without sacrificing our margins. Rail freight margin increased by around 200 basis points from 25.7% to 27.7% and operating margin also increased by around 100 basis points from 30.2% to 31.2%. Operating income has shown a good growth of 3.3%. Profit before depreciation has shown a growth of 1.8% for the period ending. And if we see for the Q3, the profit before depreciation has increased by 7.6%. There has been a flattish performance of PAT due to the depreciation, which was high by around INR 68 crores in this quarter. The reason for that is because in last financial year, we had done some correction for life of wagons. Because of that, the depreciation was less in last financial year. So that has been now at par. And because of that effect, we are seeing a dip in PAT, where profit before depreciation is showing a very healthy growth. Reason for less PAT are some other reasons are also there, like the subdued demand in domestic streams; and second is the decrease in EXIM lead by 2% due to less demand in North India and depreciation, I've already explained to you. LLF also in this quarter, LLF is showing increase of around 23% and which is in line with the total LLF that we pay to railways, around INR 450 crores every year. Last year, there were some reversals because of that, the LLF in this quarter was INR 89 crores. It is now -- in this financial year, it is corrected to INR 110.7 crores, which is the actual LLF we will be paying to railways. Now there has been growth in double stack rakes also, growth of 7% in this financial year till now from 4,608 rakes to 4,933 rakes, which is quite a healthy growth. And reduction in empty running of rakes is also quite substantial. In EXIM, it is 21%. domestic, it is 8.5%, total 12%. So both these factors, growth in double stack, reduction in empty rakes have made a positive contribution to the company's bottom line. We have -- we are continuously upgrading our infrastructure, as I have been telling in previous calls also. In this financial year till now, we have commissioned 31 high-speed rakes, which is also an all-time high for the company. And now we are having a robust fleet of 413 rakes in our kitty. And we are -- we have procured around 3,800 containers in this financial year till now. So total container fleet stands at around 57,000 containers of our own ownership. Seeing the robust demand in the market, which I will be just telling you, a short while from now, the Board of Directors have yesterday enhanced the CapEx budget for this financial year by 23% from INR 860 crores to INR 1,060 crores. Till now in this financial year, we have already spent INR 717 crores on CapEx. So we are on track, and we are procuring infrastructure, building up infrastructure, seeing the robust demand in the market. Now I would like to tell about the 2 streams, EXIM and domestic. EXIM is showing excellent growth in this financial year. EXIM alone is likely to cross a turnover of INR 60 billion revenue, which will be all-time high for EXIM stream. It's a very handsome growth. And it is likely to increase in the coming months, which I will be explaining in a short while from now. Western DFC connectivity is expected by March 2026 to JNPT. It will give a very big boost to EXIM business. Export growth till now, we have experienced around 23% growth in aluminum ingots, 22% growth in meat, 14% growth in auto parts and very good growth in rapeseed meal and rice. Imports also, we have experienced a growth of 4x growth in glass items, which are used in solar panel, 69% growth in raw cotton, 29% growth in auto parts, 22% growth in furnitures. We have rolled out a liberalized policy for cabotage movement and DPD, and this is likely to make a very big contribution in volumes in the coming months. Already, we are seeing the impact in EXIM. There is a healthy growth of 7.5% on pan-India basis in imports, out of which JNPT has shown a growth of 17%; Mundra has shown a growth of 8.4% for us; Chennai has shown a growth of 14%; and Visakhapatnam has shown a growth of 28%. And there is a healthy growth of 7% in exports also for CONCOR in this financial year. Now we come to domestic. In domestic, there is a bulk cement and tank containers, which is likely to drive growth in the coming months in a big way. Then talks are in advanced stage with Petronet Limited for ethane propane loading on a long-term basis, a long-term agreement we are going to sign with this company at Dahej, loading at Dahej. And also, talks are in advanced stage with GAIL Gas Authority for their PTA business from Mangalore port. So -- and the end-to-end logistics train that we are running from Delhi to Calcutta via Agra and Kanpur has been a huge success, and we are getting very good business on this end-to-end train also. At this juncture, I would like to keep my guidance for 13% that is 10% EXIM, 20% domestic unchanged. We are confident that by the end of financial year, we will be able to meet this guidance. Now I would like to give a brief snapshot what are the future of CONCOR in the next 3 years. going forward. So the EXIM, which will be -- as per our calculations and predictions by FY '29, every year, EXIM will show growth of more than 15% per annum. So for 3 years, we can see back-to-back growth of 15% and primary drivers will be Western DFC by March 2026. Second is assured transit time trains that we will be running between JNPA and NCR on our mega terminal at Dadri and at Kathuwas. And next is the double stacks. We will be bringing -- I'm glad to announce you that we will be bringing Jodhpur on double stack map very soon in this financial year only. We are going to commission a new terminal from where we are -- we will be running double stack trains between Jodhpur and ports. Second is Ahmedabad also, we are going to bring double-stack business very soon. At present, our terminal is not able to handle double stack. Because of that, we are not able to get that much business. And once we develop a new terminal, we are developing near Sanand, which will be capable of handling double stack rakes, and it will be also on DFC. That will also give big boost to our traffic at Ahmedabad. We have already commissioned a few terminals and -- at Mandalgarh, Jajpur, Kadakola from which we are expecting good traffic in the coming 3 years. And then next is the Nepal traffic that we are catering from our facility at Visakhapatnam and Calcutta also. So Nepal traffic, we are running at present to Birgunj. And now very soon, we will be starting at Raxaul and Biratnagar also. So this will give further boost to our EXIM business as well as domestic business till FY '29. We are having a tie-up 5-year contracts with major -- all major shipping lines like Maersk, MSC, CMA CGM, Hapag Lloyd, et cetera. These are also going to positively contribute. And next big thing is the shipping sector in which already we are -- we have made our presence felt in Middle East. And we have finalized a contract with another agency for Far East. So Far East also, we will be starting the services. Already one container we have sent. So Middle East plus Far East, the short voyages we will see for a few years, and then we will go for longer voyages. So these will be the major contributors for more than 15% growth in EXIM. Now let me come to domestic. Domestic, there is a huge potential. untapped market is there, and we are expecting more than 20% growth every year for the next 3 years, in which bulk cement and tank containers will be a primary contributor. We have already signed agreement with UltraTech, with Adani, with My Home Cement, with JK and with other parties, and they are expected to give very good business to us in bulk cement. And we have also tied up with big corporate customers like Vedanta, Jindal, Tata, GAIL Petronet already I have told you. So all these sectors will give very good growth in domestic of more than 20% for next 3 years. So by FY '29, I am projecting a top line of INR 15,000 crores for the company, which is quite achievable and 10 million TEUs handling throughput and 75 million tonnes of cargo, containerized cargo. These 3 projections I'm making for FY '29. And Board of Directors has appreciated these projections, and that was the reason for enhancing the capital budget so that we are having equipment with us to meet these targets. And let me assure you, CapEx will be around the same lines for next 3 years also. We are in expansion mode because there is a lot of demand in the market, and we are going to tap all the demand and bring more and more business to our company. So these were my opening remarks. Now we can start the question-and-answer session.

[Operator Instructions] The first question is from the line of Pulkit Patni from Goldman Sachs.

Sir, my question is, you've been giving guidance on volumes. And as you rightly highlighted, you are not too far from that. But on the revenue front, we are significantly lower. We barely do mid-single-digit revenue this year based on how we are tracking. So I just wanted to understand what's really happening on realization because it's not only domestic, but even on the EXIM side, our realizations have been fairly muted this year. And in your expectation, because you are guiding for a pretty robust number even for the next 3 years, what is the assumption of realization increase that you have taken?

See, EXIM, there is a realization is not commensurate with the physical. The reason is the -- you are seeing the throughput growth and you are correlating it with the revenue growth. Actually, you should see originating numbers for that purpose. And second thing is tonnage is not the correct parameter for correlating the revenue. Actually, it is NTKM, net ton kilometers. That is the basic parameter you should be focusing because the revenue is a function of 2 things: tonnage and distance lead. So if you see tonnage increases, but lead comes down, so that has an effect on NTKM. So correct parameter to correlate loading with the revenue will be NTKM in my opinion. So as I already told in my opening remarks, the lead of EXIM has gone down by 2% due to less demand in North India. That is a primary contributor for less realization, as you call. But as far as we are concerned, we got a good realization in EXIM as compared to last year, okay? It is not commensurate with the physical volume. That reason already I told you. Now for the next 3 years, top line of INR 15,000 crores that I have told is quite achievable because when DFC comes, we are quite optimistic that we will be able to run a short transit train on that, which will be bringing long lead traffic because it is 1,500 kilometers from NCR to JNPA, and it will give a good revenue also. and light cargo, which is at present moving by road, it will come on rail because there will be transit assurance, there will be cost benefits. So the growth that we will be getting will be excellent in terms of physical volumes as well as revenue.

Sir, can I take the liberty of asking one more question?

Yes, sure.

Yes. Sir, if I look at the last 3 years, while I understand the full connection of DFC to JNPT has been completed and the impact will come through. But a few ports in Gujarat, Mundra, Pipavav have been connected to DFC for a while now. And the impact of that have not really reflected. If you could just help us sort of solve this a little bit, what is the reason that just JNPT connection would be such a big game changer for CONCOR in terms of volume?

Now the thing is that Gujarat ports like Mundra and Pipavav, which have been connected, they are actually strictly speaking, not on DFC. They are connected till Palanpur, there is a station. DFC is there. After that, there is a feeder route for Mundra and Pipavav. So feeder route actually is not a DFC. It's the Indian Railways route. So while the connection with JNPA is different, JNPA, DFC will be going up to JNPA. So only freight trains, fast-moving container trains will be moving on this circuit. Whereas on that route, goods train, passenger train, everything moves on feeder route because it is Indian Railways route. So that is the difference. And second thing is that -- which is very important for you to understand is that the 25-tonne axle load wagon, that is high-capacity wagons that we are procuring, BLCS and BLSS. These are the 2 wagons, type of wagons, which are having a 25-tonne axle load, that means they can carry a payload of 80 tonnes. So that cannot move on Indian Railways route and it cannot have a payload of 80 tonnes. So that restriction is there. Whereas on DFC, 80-tonne payload can move. So it will improve the double stacking. If I can carry more load on that wagon on DFC because JNPA is pure DFC, there is no feeder route. So that advantage will be the second advantage. So these 2 advantages we'll see a distinct shift of traffic from road to rail.

Sir, lastly, which quarter should we see the impact of DFC come through for us?

It will be starting from next financial year. So I'm not an astrologer. I cannot predict that which quarter you will see the impact. But definitely from Q1 of next FY, we should start seeing some difference.

The next question is from the line of Jainam Shah from Equirus Securities.

Sir, just wanted one clarification, the volume growth guidance that we have given for the 5 years' time line, 4 year time line, is it on the --

3 years.

Handling part or is it on the originating part?

I have given only for 3 years' time. And I've given, if you have -- yes, if you have listened carefully, first is 10 million TEUs, which is on handling throughput. Second is 75 million tonnes, which is on cargo movement, containerized cargo. Third is INR 15,000 crores, which is on top line of revenue.

Sir, if you can just provide me the originating volume for this particular quarter?

For this particular quarter, Q3?

Yes. For EXIM and domestic.

Okay. Originating volume for this quarter is EXIM, it is 564,324 TEUs, domestic 120,817 TEUs and total is 685,141 TEUs.

Sir, just wanted to understand one thing. As you are highlighting clearly that we should be looking at the originating volume and net ton kilometers for revenue part and all those things. Why we are not publishing the originating kilometers in the press release after the quarter ends and why we are only focusing on the handling volumes -- because whenever we are asking the question on the realization, the first point is always on the -- that we should be looking at the originating volume. Then why we are shying away in giving the originating volume growth? And of course, on the originating volume growth, what could be the market share that we have witnessed over 9 months and for this particular quarter?

Okay. We will -- I have noted your request, we will see.

Yes. And sir, what would be the market share for this particular quarter and for the 9 months at the all India level.

I don't have market share with me right now for this particular quarter. For 9-month period, I can give you the market share. For EXIM, it is 53.8% and domestic, it is 55.88%. Total is 54.35%.

And what would be the comparison for last 9 months?

Last financial year.

9 months of FY '25. Yes, 9 months of FY '25.

Yes. EXIM, it is 55.28%, domestic 58.03%, total is 56.05%.

Sir, my question would be on this that, of course, we are near to our target in terms of EXIM volume guidance. We are a little bit away from our domestic volume guidance, and there has been reasons. But why we are not taking any major steps to make sure that our market share doesn't fall. We were at 75% a few years, 10, 15 years back. Now we are at 53%, 54%. So what kind of things, which has happened over the last decade, which has resulted in this kind of market share dip for us? And what kind of market share we are expecting with this kind of INR 15,000 revenue that we are expecting? Our market share is constant in that case? We are increasing it or we are thinking that it might reduce further from here on?

See, fall in market share in every conference, I am giving you the details. Reasons are pretty obvious. We are not picking up the low-margin business because we believe in giving good service to our customers, while retaining our margins. That is the primary reason. To arrest this decline in market share and to increase our market share, our company is taking a lot of steps like we are focusing on multimodal logistics parts. We are focusing on first mile, last mile transportation. So the projection that I have given for FY '29, definitely, it is going to increase our market share and take it between 65% to 70%.

If the comment of us is that we are not taking low-margin contracts [ on this ] time. But if you see our margin pre-COVID, it used to be 25%, 26%, excluding you can say other income part, whereas as of now, it is ranging in between [ 21% ], 22%. Of course, there has been an impact of LLF. But apart from that, despite having the Western DFC getting operational to a larger extent, we are doing double checking on all these parts. We are doing so much of CapEx. our margin has really not improved. Of course, our revenue growth has been slow. But on the margin part also, if you are not taking low-margin contract, there has to be some, you can say, compensatory impact on the margin, but which has not been reflective over the last so many quarters.

If you compare pre-COVID and because there was a change in LLF payment to railways.

Yes. Excluding LLF also of course. Excluding LLF also, there has been a bit of a dig in the margin.

Yes. 4x, it increased from INR 100 crores to INR 400 crores.

INR 400 crores.

And as far as the EBITDA margins are concerned, I have the numbers with me. For Q3 of this financial year, we have achieved EBITDA margin of INR 601 crores, if you take other income also, which is 25.1%. And last Q3 last financial year, it was 24.2%. So there has been an improvement of around 100 basis points. And I don't know from where you are getting the numbers. It is -- there is an improvement of margin. Similarly, for the period ending this financial year, this December, we are having a margin of INR 1,785.8 crores, which is 25.2%. And last financial year, it was INR 1753.7 crores, which is 25.4%. So it is -- percent-wise, it is exactly the same, whereas money-wise, it increased. So in fact, we have improved our margins. You please ] correct yourself ].

Sir, [indiscernible] point of view, we don't take other income into the margin part. If we exclude the other income, our margin was 22.2%, whereas it's 22%. If we are not --

So I will request you to -- so I will request you to discuss it separately.

The next question is from the line of Sumit Kishore from Axis Securities.

Sir, we have been talking about bulk cement and tank containers for quite some time now. So what is the total number of tank containers that we have presently? And what do you expect by the end of the financial year? And if you were to utilize those tank containers reasonably well, what kind of volumes would you be able to handle in a quarter? That's my first question.

See now we have, as of now, 300 tank containers of our own ownership. Apart from that, one of our customers has also procured 200 tank containers for which we have signed an agreement, and he is using our services. So if we add these 2 numbers, 500 tank containers are already there in our circuit of bulk cement by tank containers. Now we are getting 100 containers, around 1 rig every month. So we expect that by the end of financial year, 1 rig in February, 1 rig in March, 200 more containers we will get. And after that, every month, we will be getting 100 containers. So it depends on the -- actually lead like -- it depends -- the lead in between 700 to 1,000 kilometers from originating point to destination point. And turnaround, we are now improving with every movement because it's a new product. So in destocking at some places, some time is being taken. We are in touch with our customers. We are improving that. And we hope that very good impact will be visible in Q1 of next financial year.

What I'm trying to -- if you quantify this, let us say you have 4 rakes also and those rakes make -- let us say for argument, say 10 trips. I mean, we are still talking about, what, [ 4 into 10 into some 200, 300 containers ]. So that would be how much as a percentage of your existing quarterly volumes in domestic. Is it going to make a meaningful difference when you are doing already something like 350,000-plus TEUs in a quarter in domestic?

So at this moment of time, I don't have the numbers with me. I will provide you later on.

Sir, my second question is you mentioned in response to the first question that a net ton kilometer would be the right parameter. Could you provide us some sense of what have you done in the 9-month FY '26 period in net ton kilometer terms in EXIM and domestic? And please provide this on a recurring basis so that we can analyze your company properly.

So I have noted your request. We will definitely act on that.

And last question is that of the 15% -- and you've given a guidance of 20% on full year for domestic, the first 9 months is 13%. What is so extraordinary that is going to happen in the fourth quarter that you will get to 20% growth, which will imply a very high growth for the fourth quarter? And finally, on volumes on the 15% guidance for EXIM and 20% for domestic over the next 3 years, for EXIM in particular, how much is the dividend you are expecting because of DFC commissioning. If you were to segregate the benefit of DFC in that 15% CAGR, I would like to understand how much is going to be just DFC commissioning up to JNPT.

See as far as your first question is concerned, in domestic, we are going to -- we are getting good loading now in all the factors like cement is there and tiles are there and other merchandise is there. So based on that, we are quite optimistic of achieving the target that we gave at the start of financial year. Now as far as the EXIM 15% -- more than 15% growth is there, we have the numbers with us of different parameters that I told you. But at this stage, we cannot disclose those numbers to you.