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    Buy Container Corporation, target price Rs 510: Motilal Oswal

    Synopsis

    The brokerage has cut its FY21/FY22 estimates on weaker volume outlook and sharp increase in land license fee by the Railways.

    buy-sell-gettyGetty Images


    Motilal Oswal has given a buy rating to Container Corporation of India with a target price of Rs 510. The share price moved down by -3.98 per cent from its previous close of Rs 433.80. The stock’s last traded price is Rs 416.55.

    Container Corporation’s 4QFY20 results highlight loss of market share from 73 per cent last year to 67 per cent as the company exited the short-haul freight market, which had low profitability. EBITDA margin, thus, improved by 4pp year on year in FY20 to 25.9 per cent. The brokerage has cut its FY21/FY22 estimates on weaker volume outlook and sharp increase in land license fee by the Railways. The brokerage maintains buy rating on the expected longer-term volume and margin benefits from the commissioning of the Dedicated Freight Corridor (DFC) project by end-FY21.

    Investment Rationale

    Container Corporation is a direct play on the upcoming large rail freight infrastructure. While FY21 would be weak due to Covid-19, the brokerage expects 18 per cent EBITDA CAGR in FY20-25E, led by healthy volume growth and margin improvement due to operating leverage benefits. The stock trades at 12 times FY22E EV/EBITDA. The brokerage derives a discounted cash flow-based target price of Rs 510/share.

    Concor-MotilalOswal29June2020
    Source: Motilal Oswal

    Financials

    For the quarter ended March 31, 2020, the company reported consolidated sales of Rs 1584.31 crore, up 2.56 per cent from last quarter sales of Rs 1544.74 crore and down -14.34 per cent from last year's same quarter sales of Rs 1849.54 crore. The company reported net profit after tax of Rs 313.47 crore in the latest quarter.

    Promoter/FII Holdings


    Promoters held 54.80 per cent stake in the company as of March 31, 2020, while FIIs held 26.84 per cent, DIIs 13.71 per cent and public & others 4.65 per cent.



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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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