ICICI Direct has raised Container Corporation of India's (Concor) target price after the shipping company reported a strong set of Q1FY20 numbers. The brokerage firm has raised Concor's per share target to Rs 600 from the current market price of Rs 510, assigning a P/E ratio multiple of 22 times to FY21 EPS estimate of Rs 27.3.

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For the quarter ended June 2019, Concor’s standalone revenue increased by 5 percent on year-on-year (YoY) to Rs 1,638.9 crore.

The firm's revenue grew 9 percent on a like-for-like basis as the base quarter includes Service Exports from India Scheme (SEIS) incentives related income of Rs 71 crore.

The company reported an adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) of Rs 403 crore in Q1 FY20 compared to Rs 319 crore in Q1 FY19.

Adjusted operating margin for the quarter improved to 24.6 percent thanks to price hikes and change in business mix. However, profit after tax (PAT) was 10 percent lower due to the increase in finance costs and depreciation charges.

Concor expects coastal services to deliver Rs 150 crore to the topline and to establish five centres for distribution logistics in FY19.

On valuation and outlook front, ICICI Direct report says that Concor's Q1 has seen a continued deceleration in volume growth, which is the lowest in two to three years.

However, gains are seen in the surface as well as other rail players and the situation is expected to reverse with DFC connectivity to Gujarat ports in FY20.

The capital expenditure is expected to remain strong at Rs 1,000 crore for FY20.

Concor traded at Rs 500.65 per share on the NSE, down by 2.87 percent at 11.39 am. The stock touched an intra-day low of Rs 488.40, down by 5.25 percent. The one-year return on Concor stock is negative with shares correcting by over 3 percent.

However, the 10-year return on the stock is almost 114 percent, which is still lower compared to the Sensex's returns of 135 percent.

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