Nomura one of the Large FIIs which also lends Institutional Research Support to Life Insurance Corporation of India has the following views on Container Corporation of India Ltd as on date,
The Railway Ministry has allowed private operators to move bulk cargo, excluding certain items, on the Indian Railway (IR) network, thus raising the opportunity size by ~10x for Container Corp of India (CCRI). With this, demand is now more than sufficient, leading to lower competition in the existing business, too. A pick-up in industrial activity will likely lead to a turnaround in export / import traffic, benefiting port entities and container logistics companies. The key is to pick stocks that still offer value after a substantial run-up in 2009.
Led by a positive structural shift in CCRI’s growth story, the stock is a candidate for re-rating. We upgrade to BUY with a revised PT of Rs1,600 which is 18x FY12F EPS. Strength in port traffic, export recovery, early finalisation of bulk cargo entry and margin improvement in existing business will be key catalysts.
