Even over a nine-month period ended December 2019, Concor
lost 600 basis points (bps) in market share to 68 per cent. Its market share in Pipavav and Mundra ports has also come down by 100-200 bps.
The market-share erosion was more severe at Jawaharlal Nehru Port in Mumbai, where its share is down from 80 per cent to 67 per cent. The company indicated that its decision of not focusing on short-haul cargo, which is less profitable, compared to long-distance shipments, has led to market-share losses.
Say Alok Deshpande and Sameer Chuglani of Edelweiss Research, “While the near-term has held on to some extent, the company’s long-term success hinges on volume growth from dedicated freight corridor (DFC) implementation; market share loss at a juncture when DFC is yet to be commissioned raises concerns.”
The company expects some recovery in volume growth as it looks at movement of select bulk commodities such as foodgrain and cement in containers as well as on commissioning of the western DFC till Gujarat by June 2020. However, analysts are sceptical whether this will lead to a shift in volumes to rail.
Analysts at Emkay Research indicated that the number of double-stacked trains run by Concor
continued to decline for over six quarters due to demand slump and also raises concerns that the much-anticipated shift from road to rail may not happen easily even after DFC starts operations.
The other trigger for the stock would be the divestment of the government’s stake in the company, which is currently at 54.8 per cent. However, a lot will depend on the recovery in volume growth as well as the roll-out of the DFC. Given the uncertainty on both counts, investors should await a trend reversal before considering the stock.