Concor Shares Fall After Government Divestment Plan Likely To Put off

Post-elections in 2019, the government had lined up big plans to strategically divest its entire stake in the 5 top CPSEs like BPCL, Container Corporation, Shipping Corporation, THDC & NEEPCO. In the case of CONCOR government held a 54.79% stake in the company and had planned a strategic sale of a 30.5% stake. This divestment was important for the country as the financial ministry had cut corporate tax to 22% for domestic companies. JSW, Maersk, and Adani were interested in acquiring the Centre’s stake. However, until the end of the fiscal year of 2024, the financial ministry stayed put with the divestment due to concerns raised by the railway ministry. As reported around February 2024, the government still holds a 54.8% stake in the railway PSU.

About the company:

Container Corporation of India Limited (CONCOR) is an Indian public sector undertaking that is engaged in the transportation and handling of containers. Incorporated in March 1988 under the Companies Act, CONCOR commenced operations in November 1989 taking over an existing network of seven inland container depots (ICDs) from Indian Railways. The privatization process, which involves the Indian Government selling 30.8% out of its shareholding of 54.8%, was initially projected to be completed in the fiscal year 2021–2022 but has since been delayed. The company’s mission is to join its community partners and stakeholders to provide responsive, cost-effective, efficient, and reliable logistics solutions to its customers through synergy with community partners and ensuring profitability and growth.

Company’s Financials and Stock Performance

After the news of divestment being shelved by the government broke, the share price received a blow of 2% at the opening of Wednesday’s intra-trade and may even hit 3% by the close. The current market cap of the company is at Rs 674.52 Billion with a P/E ratio of 53.47. In Q4FY24, the company reported a net income of Rs. 317 billion with EBIDTA at 4.88 Billion

Conclusion: The major logistics player seems to be in a good financial position but the stock price continues to disappoint.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.