Container Corporation of India (CONCOR) shares are in focus following a weaker-than-expected Q3FY25 performance. Despite the miss, Jefferies has maintained a Buy rating while trimming its target price to ₹980, indicating a potential 26% upside from the current market price of ₹778.30.
Jefferies highlighted that CONCOR’s Q3 EBITDA was 17% below estimates, primarily due to an 11% year-on-year decline in realizations. However, the reported profit after tax (PAT) miss was less severe, aided by a change in the company’s depreciation policy. This adjustment helped cushion the overall impact on the bottom line.
On the positive side, management indicated during the earnings call that EXIM (export-import) volume growth is showing signs of recovery, with double-digit growth in January 2025 compared to a modest 5% YoY growth during the first nine months of FY25. This suggests potential for volume recovery in the coming quarters, which could help offset the recent weakness in realizations.
Given the softer Q3 performance, Jefferies has revised its FY25E-27E EBITDA estimates down by 5-6% to reflect the short-term challenges. However, the brokerage remains optimistic about CONCOR’s medium-term outlook, citing expectations that the rail share in logistics will rise with the continued development of the Dedicated Freight Corridor (DFC). This infrastructure development is anticipated to drive long-term growth in rail-based freight transport, benefiting CONCOR’s operational efficiency and profitability.
While the near-term outlook reflects weaker earnings, Jefferies believes that structural improvements in India’s logistics infrastructure and volume recovery in EXIM trade will support CONCOR’s growth trajectory in the medium to long term.
(Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should consult their financial advisors before making any investment decisions.)
