On high ground Container Corporation of India - The Smart Investor
On high ground Container Corporation of India - The Smart Investor
On high ground Container Corporation of India - The Smart Investor
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<strong>Container</strong> <strong>Corporation</strong> <strong>of</strong> <strong>India</strong><br />
Over FY02-12, its OCF and<br />
FCF have grown at a CAGR<br />
<strong>of</strong> 12% and 17%,<br />
respectively<br />
Has steady and sustainable free cash flows<br />
CCRI is a debt-free company (net cash <strong>of</strong> INR27b as at March 2012) and enjoys steady<br />
OCF and FCF. Over FY02-12, its OCF and FCF have grown at a CAGR <strong>of</strong> 12% and 17%,<br />
respectively. This is against net pr<strong>of</strong>it CAGR <strong>of</strong> 13%, due to low reinvestment<br />
requirements. It has historically maintained a dividend payout ratio <strong>of</strong> 25-30%. Despite<br />
CCRI’s INR62b capex initiative over FY13-17, we expect it to maintain 24-25% payout<br />
ratio during this period. Post the completion <strong>of</strong> its preemptive capex by FY16-17, we<br />
expect CCRI to enter a sweet spot <strong>of</strong> sustainable and robust FCF, which should lead to<br />
sharp improvement in its payout ratio.<br />
OCF & FCF generation over FY06-FY15E<br />
Dividend payout ratio has been stable between 25-30%, over FY06-FY15E<br />
Post the completion <strong>of</strong> its<br />
preemptive capex by<br />
FY16-17, we expect CCRI<br />
to enter a sweet spot <strong>of</strong><br />
sustainable and robust<br />
FCF, which should lead to<br />
sharp improvement in its<br />
payout ratio<br />
Source: Company, MOSL<br />
15 October 2012 28
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