Buy Container Corporation; target of Rs 1670: ICICIdirect

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26 Aug, 2025 12:21

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ICICIdirect.com's report on Container Corporation of India

"The Cabinet recently approved the Constitution Amendment Bill on Goods and Services Tax (GST), thereby paving way for the bill to be introduced in Parliament. In a major breakthrough, the Centre was able to keep petroleum and petroleum products under GST through states will be allowed to levy tax for the first few years. Subsequently, the entry tax was subsumed within GST while the Centre agreed to pay GST compensation for five years. With these contentious issues being ironed out, it is now anticipated that GST can be rolled out from April 1, 2016. With the introduction of GST it is expected that the goods movement as well as volume will increase manifold in the country. Concor with its countrywide network and footprints at all container ports including private is expected to be a major beneficiary of the same. Also, in FY15, container volume at all major ports has grown nearly 8% YoY on a YTD basis. Further, with the economic scenario expected to improve, Exim container volumes are anticipated to grow."

"As GST is expected to roll out in FY16, we anticipate total volume CAGR for Concor at ~11% over FY14-17E, thereby leading to revenue & earnings CAGR of ~16% each in the same period. Also, PFTs becoming operational in due course of time are expected to add another revenue line for Concor. Further, with competitive intensity remaining intact any near term risk of adverse freight rate movement is expected to be mitigated by higher volume generation. Finally, as strong balance sheet and superior cash flow calls for upgradation, we assign P/E multiple of 22x FY17E EPS to arrive at target price of Rs 1670 and have a BUY recommendation on the stock", says ICICIdirect.com research report.

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