Commissioning of dedicated rail corridors, finality of land license fees with Railways Ministry augurs well for Container Corporation; privatization in true earnest can rerate the stock

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Container Corpn. is India’s largest rail logistics company. Its PSU status ensures lion’s share of the rail infrastructure. Recent performance for the company has been soft due to slowdown in global trade which significantly worsened due to covid-19 pandemic. Commissioning of the dedicated freight corridor in FY22 and setting up of new terminals will facilitate higher long term growth. Past track record of erratic profits and PSU status are key risk factors. Recent 5x increase in land license fees was a cause for concern but reports suggest that matter has been settled with the Railways Ministry. We have a neutral weight rating due to its dominant position and some what steady growth prospects and fair valuations. The company has been considered for privatization and should that take place the stock could spike – 21-05-2021 Price: 586.45 Rating: Neutral Recommendation: Hold

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