Thursday, May 27, 2010

>Container Corporation of India (NOMURA)

Container traffic data released by the Indian Ports Association suggest flattish m-m activity in April 2010, though y-y growth was still healthy at 21.4%. Note that April has historically seen subdued EXIM traffic activity over March, with the latter period being inflated by a boost in year-end activity. However, with the stock trading at 17x FY11F P/E and possible downsides to our estimates, we maintain NEUTRAL.

Strength in port traffic could trigger a positive change, in our view, on Container Corp of India. Risks to margins exist in the domestic segment, however, and these could pose as negative risks to estimates and targets.

Anchor themes
A pick-up in industrial activity will likely lead to a turnaround in EXIM traffic, benefiting port entities and container logistics companies. The key is to pick stocks that still offer value after a substantial run-up in 2009.

To read the full report: CCI