Concor shares: Ashika cuts stock price target to Rs 900, says this

Ashika Stock Broking has revised its target price for Container Corporation of India Ltd (Concor) to Rs 900, down from Rs 1,050. This adjustment reflects a more cautious view on Concor's growth potential due to macroeconomic uncertainties and possible delays in infrastructure projects. The firm valued the stock at 49 times the FY26 expected bonus-adjusted EPS of Rs 18.20.

Concor plans to commission four new terminals in FY26 at Patri, Mandalgarh, Chunar, and a location near Jodhpur. These developments aim to unlock additional regional freight opportunities, enhancing Concor's network capabilities to meet growing demand. The strategic placement of these terminals is expected to facilitate better access to key markets, thereby boosting operational efficiency.

The management at Concor is optimistic, forecasting a 10% growth in EXIM volumes and a 20% rise in domestic markets for FY26. This translates to a 13% overall volume growth. Realization is expected to remain stable or improve modestly, said the management, noting that EBITDA margins are anticipated to be between 24-25%, supported by improved network efficiency and strategic cargo management. The focus on double stacking and selective rejection of low-margin domestic cargo is expected to further enhance profitability.

Ashika's more conservative estimates predict an 8% growth in EXIM and a 12% increase in domestic volumes, which would result in approximately 9% total volume growth. The firm's caution arises from potential disruptions in India's EXIM trade environment and the risk of delays in completing the Dedicated Freight Corridor (DFC) connectivity to JNPT by December 2025. Any such delays could significantly impact the expected volume growth in the last quarter of FY26.

Concor's long-term goals by FY28 include expanding to 100 terminals and over 500 rakes, as well as increasing container capacity to 70,000 units. This expansion is part of Concor's strategy to bolster its market position in anticipation of strong freight demand. The strategic initiatives are aligned with the broader industry trends that favor rail over road transport due to cost and environmental benefits.

The capital expenditure for FY26 is projected at Rs 8.6 billion, with significant investments directed towards wagons, containers, terminals, and IT infrastructure. This underscores Concor's commitment to enhancing its operational capabilities and service offerings. The investment in IT infrastructure is particularly aimed at improving service delivery and operational tracking, ensuring that Concor remains competitive in a rapidly evolving logistics landscape.

The company anticipates a significant volume boost in the fourth quarter of FY26, driven by the expected commissioning of the DFC connectivity to JNPT. This infrastructure upgrade is expected to facilitate a substantial shift from road to rail, particularly on the NCR-JNPT corridor, due to improved cost efficiency and transit time predictability. The transition is expected to reduce logistics costs for clients and improve overall service reliability.

Despite near-term challenges, Ashika Stock Broking remains positive on Concor's long-term growth trajectory. The firm's structural steps to enhance network capacity and improve margins underscore its resilience and readiness to tackle future market demands. Concor's proactive approach in addressing potential risks and leveraging opportunities is expected to sustain its growth momentum in the coming years.