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ICICI Direct Research
Container Corporation (Buy)
CMP: ₹377.95
Target: ₹433
Fundamental outlook: a) Container Corporation of India (Concor) reported a market share of 67-68 per cent in the container train operator segment for 9MFY20; b) In the near-term, revenue growth may remain muted. However, it expects the situation to reverse with DFC connectivity to Gujarat ports (infrastructure/facilities close to the DFC route). Concor aims to consistently invest about ₹1,000 crore annually, which has helped the company to shape up the business around MMLPs (83 in FY19
Technical outlook: a) long-term upward sloping trend line drawn adjoining 2003-08 lows (₹22–116), at ₹320; b) 80 per cent retracement of 2011-19 rally (₹171-666), at ₹270; and c) as per change of polarity concept, erstwhile resistance of ₹320 has now acted as strong support.
We expect the stock to undergo bottoming process over the next few weeks, which should be used to accumulate stock. Hence, it offers a fresh entry opportunity with favourable risk reward.
Stock price is expected to rally towards ₹433, which is 50 per cent retracement of February-March 20 decline (₹1,061-600), at ₹433.
Risks: About ₹ 12,000-16,000 crore cash outflow (media sources) due to potential buyout of ICDs on the railway land and continued downturn in Exim volumes due to the Covid-19 crisis.
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