The sluggish trend in imports and exports hurt the transporter’s volumes last year; this year should be better.
With exports and imports slowing down sharply, especially towards the close of the year, Concor revenues for 2008-09, at Rs 3,413 crore, were just marginally higher than previous year. The March 2009 quarter was particularly tough for the inland transportation company, though the management believes the environment is improving. In fact, it says there has been a clear uptrend in imports since mid-March, adding that the company’s business should grow by about 10 per cent in the current year.
That may not sound too encouraging, given that the base is already low and could result in the earnings per share (EPS) growing at a slower pace than it did last year. Analysts, in fact, are pencilling in a high single-digit growth in the top line and about an 8 per cent increase in the bottom line. That means the stock is trading at over 11 times estimated 2009-10 earnings which may seem expensive.
However, with the economy expected to see a revival early next year, Concor’s performance could improve significantly in 2010-11, with a growth in revenues of around 13 per cent and a rise in earnings of over 12 per cent. Also the company is efficient at the operating level and it’s the higher depreciation charges that are eating into the profits. Moreover, Concor has around Rs 1,700 crore of cash on its books.
The management appears confident that the situation will improve and is going ahead with its expansion plans. Having spent around Rs 500 crore last year, it plans to invest over Rs 600 crore in the current year. It has bought wagons, expanded its inland container depot network and purchased handling equipment, the idea being to increase capacity ahead of the demand. Although volumes for goods exported and imported have been relatively poor, Concor has been transporting an increasing quantity of goods for the domestic market. It has managed to win orders by passing on the benefit of lower haulage charges, levied by Indian Railways, to its customers.
