The stock currently trades at Rs. 1790 (at a PE Ratio of 17 times its trailing 12 month earnings) and has sharply underperformed the BSE SENSEX Index over the last year. It has been rangebound between Rs.1800-2400. According to technical analysts, it has a long term support at Rs. 1550.
Reasons to Invest:
- Established integrated rail logistics giant.
- Long gestation period in the logistics business.
- Improvement in Road and Port infrastructure.
- Concor is DEBT FREE.
- Unlocking of value through Privatization/Disinvestment: The Indian Railways currently holds 63.09 % in CONCOR. The Indian government has recently been divesting stakes in public sector enterprises in the power sector, so a further stake sale by the government in the future cannot be ruled out.
Concerns:
- Increased competition from the private sector
- Increased rail freight charges payable to Indian Railways.
- Delays in development of Port and Rail Infrastructure.
- Delays in implementation of the Dedicated Freight Corridor Project.
- Slowdown in Export- Import (EXIM) business, if there is a global slowdown, (EXIM =80% of total business now)
- Risk of a rising Rupee hurting Indian Exporters
- Low Liquidity of CONCOR stock: The stock is thinly traded, with 27% being held by Foreign Institutional Investors, many of whom have been long term investors, and just 2% being held by individual investors.
I have been holding shares of CONCOR over the last two years and have been buying the stock this week. I will continue to add it on declines.
For a patient and risk averse long term investor, this integrated rail logistics player is an ideal bet.
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