JP Morgan assigns overweight rating on Concor
Published on Monday, September 1st, 2008 at 5:17 AMAuthor: admin (5507 Articles)
Container Corp of india
Research: JP Morgan
Rating: Overweight
CMP: Rs 877
JP Morgan has assigned an ‘overweight’ rating on Container Corporation of India (Concor) with a March ’09 price target of Rs 1,010. The price target implies a 16% potential share price upside from current levels. Concor is India’s largest railway container freight operator with an over 90% market share.
By that estimate, Concor will have an earnings CAGR of 16% over FY08-10 driven by growth in containerised cargo traffic. Given sustained growth in India’s foreign trade, JP Morgan expects container traffic to grow at 14% over FY08-10E. It expects Concor to be a key beneficiary of this growth, given its unparalleled infrastructure network with 58 inland container depots (ICDs) and over 150 rakes and established customer relationship.
The company’s revenue growth is likely to accelerate to 18% CAGR over FY08-10E (versus 10% in FY08), given a sharp increase in customer tariffs. The March ’09 price target is based on discounted cash flows (DCF) and implies 13x one-year forward P/E on FY10E EPS (which is at a 10% discount to its average historical three-year multiple).
The multiple looks justified, given rising competition and moderation in earnings growth. Downside risks to the price target and view are a challenging macro environment, given high crude oil prices and rising inflation, which can slow down India’s foreign trade; and a sharper-than-expected increase in competitive intensity.
Source : MoneyControl
Subscribe to my newsletter filling the form below. I'll try to make you happy.
Related Posts :
|
|
|
Market Live |
|
|
Loading ...