230% Dividend Payout: Navratna PSU Railway Stock Signs MoU With Shipping Corp; Shares Climb

The shares of Container Corporation of India (CONCOR) experienced a notable rise, trading up by more than 3% at Rs 978 per share as of 12:40 pm on the National Stock Exchange (NSE). This surge comes on the back of CONCOR's recent announcement of a partnership with the Shipping Corporation of India (SCI), a move that is expected to significantly boost both companies' logistics capabilities and market reach.

On June 3, 2024, CONCOR and SCI signed a Memorandum of Understanding (MoU) aimed at exploring business opportunities that leverage each other's infrastructure and expertise. This partnership is poised to deliver seamless, cost-effective end-to-end logistics services to customers through a single-window system. Sanjay Swarup, Chairman and Managing Director (CMD) of CONCOR, emphasized the importance of this collaboration in expanding CONCOR's footprint both domestically and internationally.

"This MoU will enable us to utilize SCI's shipping services to develop CONCOR's presence at overseas locations and to venture into Coastal & Inland Waterways trade," said Swarup. "We aim to offer a wide range of customizable logistics solutions that benefit trade at large."

In an exclusive interview with Moneycontrol, Swarup outlined CONCOR's ambitious growth targets for the 2024-25 financial year. The company aims to increase its overall cargo volumes by 18-20%, supported by a planned capital expenditure of ₹610 crore. This investment will be directed towards developing terminals, procuring wagons and containers, upgrading IT infrastructure, and acquiring land.

"We expect a 15% growth in EXIM (Export-Import) and 25% growth in the Domestic segment, translating to an overall growth of 18-20% for CONCOR," Swarup detailed. Despite the initial dip in volumes following the introduction of the Busy Season Surcharge by Indian Railways in October 2023, traffic has stabilized, and the trade has adjusted to the increased tariffs. This adjustment allowed CONCOR to achieve its highest-ever throughput of 4.72 million TEUs in 2023-24, marking an 8.25% increase over the previous year.

CONCOR's financial performance has been robust, with the company maintaining an EBITDA margin of around 24-25%, which is exceptional for the logistics sector where margins are typically in the single digits. "We are confident that CONCOR will continue to maintain an EBITDA margin of 24-25%," Swarup added. "Our successful trial movements of 12-foot containers for FMCG cargo have paved the way for regular operations, and we aim to capture this new business segment soon."

Additionally, CONCOR operates 4 million square feet of warehouse space across various terminals in India. The company plans to expand its warehouse capacity in response to proposals from trade members, indicating a strong demand for warehousing solutions.

Over the past year, CONCOR's shares have delivered returns of over 40%, and the three-year returns stand at just over 36%. The stock's 52-week range highlights its volatility, with a low of Rs 629.20 and a high of Rs 1,180 per share.

For the fiscal year ending March 2024, CONCOR declared an equity dividend of 230%, amounting to Rs 11.5 per share. This translates to a dividend yield of 1.18% based on the current share price of Rs 975.05. The company has a consistent dividend track record over the last five years.

In 2018, CONCOR announced a bonus issue in the ratio of 1:4, with the share quoting ex-bonus from February 4, 2019. The same year, the company also split the face value of its shares from Rs 10 to Rs 5, effective from June 26, 2018.

Incorporated in March 1988 as a Public Sector Enterprise under the Ministry of Railways, CONCOR has played a pivotal role in developing modern multimodal transport logistics and infrastructure to support India's growing international trade. The company's strategic initiatives and investments have consistently aimed at enhancing operational efficiency and expanding its service portfolio.

With the new MoU with SCI, CONCOR is well-positioned to further strengthen its market position and drive substantial growth in the logistics sector. This partnership is expected to unlock new business opportunities, optimize logistics solutions, and ultimately, create value for all stakeholders involved.