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ICICI Securities
Concor (Buy)
CMP: ₹389
Target: ₹460
Container Corporation of India Ltd (Concor) is the holding company. The company is engaged in transportation of containers (rail and road), and handling of containers. The company is also engaged in the operation of logistics facilities, including dry ports, container freight stations and private freight terminals. Its divisions are Exim and Domestic.
It’s clear now that Q1FY21 will witness a certain increase in land license fee and one can only notice the scenarios around the possible increase (refer to Ministry of Railways Circular Link). More importantly Concor has already given up 15 terminals (link) which being at the ‘heart of cities’ were expensive real estate and were not leading to any meaningful business.
We see a range of ₹300-800 crore as total incidence of land licence fees for Concor, against about ₹200 crore currently incurred. We had previously factored in a scenario wherein, the company is made to acquire the Railways land in the wake of possible divestment. The resultant leverage and earnings impact would have been detrimental to i) the cause of divestment; and ii) for existing minority and majority shareholders.
We upgrade Concor to ‘buy’ from ‘hold’ with a revised target price of ₹460/share (₹337/share earlier).
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