Goldman Sachs Research has downgraded Container Corp., citing a 16% downside due to rising competition and weak growth in rail container traffic.
According to the brokerage's report, the company's earnings face downside risks because of sluggish growth in rail container traffic and concerns about losing market share amid growing competition.
Despite the recent correction in the stock price, Goldman Sachs expects further downside. The brokerage has revised the company's 12-month target price to Rs 710, indicating a potential downside of 17%.
Container Corp. reported weak 6% year-on-year volume growth for the first half of the year, with export-import volumes rising just 3% and domestic volumes up 22%.
Given that the current rail container traffic run-rate in October and November is similar, analysts believe the company's growth guidance appears overly optimistic. Rail container growth in October was 7.7%, while in November, it was a more modest 3.9%.
Although Container Corp.'s shares have already corrected in recent months, the brokerage expects further de-rating of the stock.
The brokerage's report on Adani Ports and Special Economic Zone Ltd. highlighted their dominant position in ports, which is expected to help them capture market share in inland logistics, potentially taking business away from incumbents like Container Corp.
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