Jefferies is bullish on this Indian PSU stock, sees these key triggers

“Our estimates factor ₹75 bn as cash outflow for 35-yr land lease for Concor at 6%. Rate revision to 1.5% could add 7-8% to our ₹850 PT and 2-10% to our FY24E-25E EPS,” the note stated. The brokerage house has maintained its Buy rating on the PSU stock with a target price of ₹850 apiece.

Concor is a dominant market leader in rail logistics with land along the DFC and net debt free, making it a lucrative asset. Media reports indicate that Adani Ports, DP World, PSA (Singapore) are among the many interested bidders. 

LLF policy will give bidders clarity on Concor’s leased land rates, a key for determining profitability. Process is likely to take 6-9 months from the time of policy announcement, it said. 

“With the national elections in 1HCY24, the policy should come out before end-FY23E as divestment could move to the back-burner as we move closer to the election dates. If the current media news is confirmed, it could be a near-term trigger for the stock. Concor has not yet commented on the same. Volume growth should drive upside for Concor over the next 6-12 months, with privatisation being the additional trigger,” Jefferies added. 

Though, downside risks, as per the brokerage could be indefinite delay in DFC, and railways bringing up LLF again.

A Navratna Company under the ownership of Ministry of Railways, Container Corporation of India Ltd was incorporated in March 1988 and commenced operation from November 1989 taking over the existing network of 7 ICDs from the Indian Railways. In addition to providing inland transport by rail for containers, it has also expanded to cover management of ports, air cargo complexes and establishing cold-chain.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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