Shares of Concor jump after Q2 sales and net profit above forecasts; is it time to buy?

 Shares of Concor jump after Q2 sales and net profit above forecasts; is it time to buy?

Concor's volumes and efficiency would undoubtedly increase significantly with the completion of the Dedicated Freight Corridor (DFC), according to Nuvama Institutional Equities.

On November 6, shares of Container Corporation (Concor) surged more than 2 percent as the company's September quarter profits above analyst projections. In the fiscal second quarter, profit after tax (PAT) increased at an excellent rate of 18%, while sales increased by 11% year over year.

Analysts anticipate steady rise in Concor's volume in the future. They said that the completion of the Dedicated Freight Corridor (DFC) would undoubtedly significantly increase volumes and efficiency.

On the National Stock Exchange (NSE), Cocor shares were up about 2 percent at Rs 727.60 as of 9:17 a.m.

Concor's volumes should experience a 15 percent compound annual growth rate (CAGR) in FY23-26E as well as a 23 percent profit CAGR with DFC, predicts Jefferies. "We anticipate normalised rail service post June cyclone, road to rail shift as well as market share/margin recovery are expected to contribute to stock upside," it said.

The firm should prosper as freight traffic shifts from road to rail, experts argued, and it is expected to preserve its profitability and market share position. The company states that Concor presently has a 65–70% market share.

Is it better to purchase, hold, or sell Concor stock?

The shares of Concor received a "buy" recommendation from the international brokerage company. It has maintained the target price at Rs 825 for the base scenario. "Considering Concor's nationwide presence in India, we anticipate maintaining market dominance. DFC should result in a 15% CAGR increase in volumes between FY23 and FY26E, the report said. Additionally, analysts anticipate a strong financial sheet with net cash.

Jefferies has set Concor's target price at Rs 1,050 in the Upside Scenario. If Concor is able to significantly expand its market share and the DFC is commissioned ahead of schedule, there might be a significant boost in value. The stock may rise if the company's operations continue to improve and there is less empty-running, which expands margins.

Negative risks include Railways hiking up the land license charge (LLF) once again and an extended delay in DFC.

A 'buy' call has also been placed on the stock by Citi, a foreign brokerage, with a target price of Rs 844 a share.

Concor's volumes and efficiency would undoubtedly increase significantly with the completion of the Dedicated Freight Corridor (DFC), according to Nuvama Institutional Equities. Still, geopolitical challenges might push back the company's capital expenditure goals by a year or more.

However, we think that FY24E should see the majority of the DFC scenario come to pass. We anticipate significant volume increase with the introduction of high capacity rakes, double stacking, and Concor exploring new markets like bulk cement," the statement said. In addition, management persisted in its goal of a 10–12% increase in volumes, both top and bottom line.

Nuvama has set a target price of Rs 690 for the company, with a hold recommendation. "The stock’s current valuation accurately represents the DFC volume potential, in our view," it said. The domestic brokerage anticipates receiving DFC benefits beginning in FY24E. "Any further delay in completion of DFC will be a downside risk to our acceptable target price," it said.

Over the last six months, Concor's shares have increased by over 13 percent. On the other hand, the stock has down around 3% so far this year.