Concor: Building Wealth Through Logistics

In recent times, Container Corporation of India (Concor) attracted attention when, during a choppy trading period, the stock touched its 52-week high of Rs 1132 (April 3, 2012) on the BSE. In fact, the stock has been gaining substantially over the last one year, and went up almost 36.38% from the Rs 830 level it had touched on May 9, 2012. We sought to know the reasons behind this strong performance, and took a closer look at the present state of affairs of the company and its future projects. Not surprisingly, we found that the company is consistently building its infrastructure to bolster its undisputed market leader position, with 62 Inland Container Depots (ICDs) and Container Freight Station (CFS) in India.

In a major development, Concor is developing a giant Inland Container Depot (ICD) at Rewari, Rajasthan. A K Gupta, CMD, Concor reveals, “We have been constantly developing our capacities in the logistics sector and work at our new Rewari terminal is going at a brisk pace. This 270-acre depot would be our biggest terminal and would be completed in two and a half years, with a total capex of Rs 475 crore”.

At present, ICD Dadri in Uttar Pradesh is the company’s biggest facility spreading across 250 acres. The Rewari facility would be key from the point of view of revenues too because it is on the DFC (Dedicated Freight Corridor) that is being slated to commence by 2017. “Once DFC is started, we will connect it in 3 days. By that time, we will achieve more than 50% capacity utilisation at the terminal”, Gupta adds. Engine rolling is slated to start at the capacity shortly, and by the end of April 2013, it will start commercial operations. Marginal revenues will start flowing in this fiscal.

The company is also in talks with some retail chain owners to establish distribution centres there to expand its business avenues. A South Korean industrial group is also setting up their facility near the terminal. “Taking that into account, the total investment would certainly cross Rs 800 crore”, notes Gupta.

Concor is gearing itself to take a big leap forward. In 2012-13 itself, it undertook a total capex of Rs 940 crore to develop many facilities across India in addition to those in Rewari and Pantnagar (Uttarakhand). What is interesting is that in the past, the company’s average capex was around Rs 350 crore per year and this has increased it by over 2.5x last year. It is also establishing a facility at Pantnagar at a cost of Rs 100 crore to facilitate the industries of Uttarakhand.

Financially speaking, Concor has maintained its sound track record, with its topline clocking more than Rs 1100 crore per quarter consistently for the last many quarters. Its PAT margin was also very strong at more than 20% with a PE of 15.76x. During FY12, the company’s topline remained robust at Rs 4377.49 crore, up 9.43% from the preceding year, while the PAT rose to Rs 1340.27 crore up 12% from the preceding year. Encouraged by this performance, the shareholding of FIIs in the company stands at over 25%.

Looking at all these factors, it seems quite likely that Concor’s revenue would improve going forward. This will certainly support its topline as well as the bottomline. This stock can definitely be looked at for investment with a long-term perspective.