The logistics industry in India is poised for significant growth, projected to reach approximately $484 billion by 2029, with a compound annual growth rate of 8.8 percent from 2024. Key drivers include the expansion of e-commerce, government initiatives to improve infrastructure, and technological advancements in operations. Overall, the sector is evolving towards sustainability and digital transformation, aligning with global standards and consumer expectations.
With a market capitalization of Rs 50,775 crore, on Tuesday, the shares of Container Corporation of India Ltd touched a day’s low of Rs. 832 which is 2.62 percent lower than the previous closing price of Rs. 855.75 apiece. The stock touched a day’s high of Rs. 850. This stock has delivered negative returns of around 3 percent in the past year and thus underperformed the nifty index in the same period.
Brokrage Reccomdation:-
Goldman Sachs, one of the globally reputed brokerages firm, retains a ‘Sell’ call on the stock with a target price of Rs 710 apiece cut from Rs 810 per share earlier, indicating a potential downside of 17 percent from Wednesday’s closing price of Rs 855.75 per share.
Brokerage rational:-
As per the brokerage, They see further downside risk for CONCOR which is driven by weak rail container traffic growth and an ongoing earnings downgrade cycle. The company also faces concerns over market share erosion due to rising competition. In Q2 FY25, CONCOR’s handling volume increased by 6 percent, with Exim volume rising by 4 percent and domestic volume growing by 14%. For H1 FY25, the volumes grew by 6 percent year-on-year. However, Goldman Sachs considers this to be weak growth.
Given that the container traffic run-rate for October and November mirrored H1 trends, Goldman Sachs believes CONCOR’s management guidance appears overly ambitious. Previously, the company set a target of 15 percent growth for Exim and 25 percent for the domestic segment in FY25. To meet these targets, CONCOR would need to achieve 26 percent growth in Exim and 35 percent growth in the domestic segment in the second half of the fiscal year.
Financial performance:-
The company’s revenue surged 4.23 percent, increasing from Rs 2,195 crore in Q2FY24 to Rs 2,288 crore in Q2FY25. However, net profit declined by 0.54 percent from Rs 368 crore to Rs 366 crore in the same period.
Revenue segmentation:-
In Q2FY25, Container Corporation of India’s revenue consists of Exim which contributes around 67 percent, and Domestic contributes the remaining 33 percent. The Operating
profits from Exim contribute around 85 percent and the remaining 15 percent from Domestic. The Operating margins on Exim are much higher compared to the Domestic.
Company profile:-
Container Corporation of India Ltd. (CONCOR) is a leading logistics and transportation company established in 1988. They primarily focus on containerization in India. They operate a vast network of 66 Inland Container Depots (ICDs) and Container Freight Stations (CFSs), facilitating multimodal transport solutions involving rail, road, and coastal shipping.
CONCOR’s business model focuses on logistics services being efficient which includes terminal operations, cargo handling, and warehousing. They aim to provide cost-effective and reliable solutions while maintaining a commitment to social responsibility and business practices and positioning itself as the choice in domestic and international trade.
Written by Santhosh S
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