Buy Container Corporation of India; target of Rs 460: ICICI Securities

ICICI Securities research report on Container Corporation of India

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 Rs 3-8bn as total incidence of land licence fees for Concor, against ~ Rs 2bn 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.

Outlook

We upgrade Concor to BUY from HOLD with a revised target price of Rs460/share (Rs 337/share earlier).

Container Corporation of India 03062020