Great Eastern Shipping & ConCor: B&K Securities sees up to 60% rally in these two PSU stocks

By admin On Mar 21, 2023

Domestic brokerage firm B&K Securities is positive on a couple of state-owned companies, namely Great Eastern Shipping Company (GESC) and Container Corporation of India (Concor). It sees an up to 60 per cent upside in the public sector undertakings (PSUs).

It has cited multiple reasons for both the counters, which may drive the rally in both the stocks. It sees strong demand for both companies, a rise in volumes and an increase in free cash flow of the companies. Here was B&K Securities said about these stocks:

Great Eastern Shipping Company | Buy | Target Price: Rs 933 | Upside Potential: 60%
GESC’s offshore division is set to breakeven in FY25F as the entire offshore fleet will get re-priced by the end of FY25F; consequently, stability and visibility of earnings also continue to improve as offshore picks up, and the company remains on track to generate Rs 3,500-4,000 crore in free cash flow by end FY25F, said B&K Securities.

“Sharp NAV re-rating upside driven by asset prices normalizing higher is largely over; strong cash generation should lead to continued NAV increments. Management believes tanker rates are expected to remain strong while dry-bulk is expected to improve in 2HFY24,” it said reiterating a buy rating on the stock with an unchanged target price of Rs 933.

Container Corporation of India | Buy | Target Price: Rs 747 | Upside Potential: 26%
B&K Securities says that value is emerging in the stock post 21 per cent correction, option value from DFC and divestment buzz. It believes Concor remains the most important part of Adani Group’s vision to dominate the logistics sector in India. There is still fiscal scope to carry out this acquisition.

The stock is trading close to FY21 median valuation of 11x. In the last 10 years, the stock has rarely traded below current valuations. While there remains some risk of street FY25F earnings correcting by another 10 per cent. The share price has limited downside from these levels given support from divestment-related news flow and improved DFC, the brokerage said while assigning a buy tag for a target price of Rs 747.

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