Concor shares crack after downgrade from Kotak; could it be an opportunity to buy?

Shares of Container Corporation of India (Concor) dropped about 5 per cent during the trading session on Tuesday amid the downgrade from Kotak Institutional Equities. The state-owned logistics player has been on a downward trajectory amid the reports of delay in its disinvestment. Shares of Concor dropped 5 per cent during the trading session on Monday to Rs 629.45 and finally settled at Rs 637, 4 per cent lower. However, Kotak sees more pain in the stock and suggests it to fall further from the current levels. On the contrary, technical experts think otherwise. "Our assessment of Concor’s pricing suggests weakness in margin and a change in pricing strategy after a period of four years. A change in guard at the CMD level may accelerate the shift to maintaining/growing its market share—a strategy followed by the earlier CMD until FY17," said Kotak Institutional Equities' report. Competitive pressure from peers such as GRFL and Adani Logistics will only increase for Concor. The EXIM segment margin then at high-teens was much lower than the current 24 per cent levels, it said while downgrading Concor to 'sell' from 'reduce' with an unchanged fair value of Rs 610. The Rs 12,000 crore disinvestment plan of Container Corporation of India has remained jeopardized because of the concerns raised by the railway ministry, its parent organization. The Railways has raised some issues in the disinvestment, and is not keen to sell the asset, said media reports. The strategic sale of Concor needs to receive a green signal from NITI Aayog and the railways. The parent firm calls for making some more decisions before the disinvestment, the reports said. However, the sale-buzz of the PSU garnered attention of global majors like Maersk, and the process stands at status quo. Shares of Concor continue to remain under pressure. The stock has dropped about 15 per cent in the year 2023 so far, while it has remained flat in the last one year. Technical analysts, decoding the charts, second the notion of near-term selling pressure on the stock and suggest traders with a long-term view to accumulate and average the stock with higher targets in the longer term. Concor on its quarterly charts has been consolidating from the past nine quarters in the range of Rs 555-828 levels. It can be observed that the stock has been in a strong uptrend since 2001 and has been in a series of higher tops & higher bottoms formation, said Sujit Deodhar, Head Technical Analyst at Wellworth Share & Stock Broking.  

"Every time when the stock approaches the lower end of the range, buying interest emerges and Rs 555 will act as a strong support for this stock, while levels of Rs 828 will act as a supply zone in near term. So, for traders the range is set, but for investors this stock has more upside potential and it could hit levels of Rs 1100 as projected with a support at Rs 550," he said. Concor is looking bearish as of now and fresh long positions are not suggested at this price. Price could tank nearly Rs 600-570 in coming days. Those who are in it can book profits or be ready for averaging in it, suggested VLA Ambala, a Sebi registered research analyst with Stock Market Today. "If you are bullish, then movement buyers wait for price to breakout its immediate resistance at Rs 690 and let it sustain above than only, we can expect targets of Rs 720, Rs 750, Rs 780, Rs 800, Rs 830 and Rs 850. Post this breakout stop loss levels will be at Rs 610," she advised.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Business Today)

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