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Giant Advances

The company spans its segment like a colossus, ensuring profitable performances

Business
Though India’s logistics sector is still at a nascent stage,  Container Corporation of India (CONCOR), with its vast network of logistics infrastructure, controls 60 per cent of the market. The company handles imports and exports to and from India from some 40 dry ports or terminals spread across the country. Moreover with its extensive rail network, CONCOR has the best hinterland connectivity.

Fundamental Performance
The sector in recent times is going through some de-growth due to manufacturing sector slow-down, still CONCOR is better off than most companies in this segment. With no debt the company’s strength lies in the infrastructure it has built over all these years. Furthermore with the management still sticking to the expansion plan, it shows the internal strength of the company. But still the company has lost some its market dominance since the opening up of this sector.

As of March 31, 2009 CONCOR has got Rs 1,980 crore as cash or Rs 152 cash per share, which lends credence to ability of the company to stand on its own during bad times. Over the past five years the company’s top-line grew by 14.18 per cent while its bottom-line grew by 17.40 per cent. The company has got a dividend payout ratio of 22.23 per cent.

Stock Performance
Being the only profit-making company in this segment CONCOR is the natural investor’s pick. While the threat from competition may still persist but it will take a long time for the private sector to attain the critical mass to threaten CONCOR. The private entrants first have to shell out huge investments to put up adequate infrastructure. It is here that CONCOR has the advantage.

Over the last 5 years the stock has delivered an annualized return of over 25 per cent. Currently, the stock trades at an EPS of Rs 63 and a PE of 17.55, which is very much in line with its 5-year historic median of 16.7. Gateway Distripark, its nearest peer, trades at a PE of 18 with an EPS of just Rs 6.

History
CONCOR was formed in 1988 to turn India into an export-import hub. Till a few years ago it was the only company that could transport goods through railroads. It is under the ambit of the Ministry of Railways.

Back to Story: Profit from PSUs
Alse see:  Container Corporation of India (CONCOR)

This article was previously published in October 2009 issue of  Wealth Insight