Container Corp is another key stock in focus. Jefferies has raised the price target for the stock to Rs 825 and sees upside potential of 18%. They believe Concor will maintain its profitability and market share position and regain lost market share as its dedicated freight network presence pays off.
Road to rail cargo shift is seeing traction as Dadri-Rewari stretch was completed in Q1FY24. Faster turnaround time and 15% cost differential is expected to help increase bias towards rail freight. According to them, the FY24 guidance remains at least 10% YoY EXIM and 15% YoY domestic volume growth.
The distance of the Gujarat ports to Dadri is 1,100-1,200 km and the direct freigt corridor wil be transporting cargo at Rs 1.1/t km vs Rs1.4 and above by road. Moreover, delivery schedules with rail is expected to be at least 12-18 hours lower than on the road. Trains are electrified between Palanpur Junction to Dadri and last mile from Palanpur to Pipavav Port. Palanpur to Mundra should be electrified by Dec 2023. This will further reduce transit time as diesel to electric loco changeover (2-4 hours) will not be needed.
According to Jefferies Concor’s volumes should see 15% CAGR in FY23-26E with DFC. According to them, normalised rail operations, road to rail shift and market share/margin recovery should lead to stock upside. However, they pointed out that a key downside risk was indefinite delay in DFC; and Railways bringing up LLF again.
Container Corporation of India Ltd. (CONCOR) commenced operation in November 1989, taking over the existing network of seven ICDs from the Indian Railways. It is now the market leader, having the largest network of 62 ICDs/CFSs in India. In addition to providing inland transport by rail for containers, it has expanded to cover management of ports, air cargo complexes, and establishing cold-chain.