Report Date: 2025-06-06
Current Price: ₹1,666
Note: All financial values are in crores unless otherwise specified.
Recommendation: BUY
| Scenario | Price Target | Upside Potential (%) | Years | Revenue CAGR (%) | Discount Rate (%) | Exit P/E | Start Revenue (crores) | End Revenue (crores) | End Profit (crores) |
|---|---|---|---|---|---|---|---|---|---|
| Conservative | 1434.80 | -13.88 | 3 | 30.0 | 25.0 | 30 | 124 | 272.43 | 50.53 |
| Base Case | 1792.03 | 7.56 | 3 | 40.0 | 25.0 | 30 | 124 | 340.26 | 63.11 |
| Optimistic | 2204.11 | 32.30 | 3 | 50.0 | 25.0 | 30 | 124 | 418.50 | 77.62 |
Concord Control Systems demonstrates impressive growth with sales increasing 87.9% year-over-year and profit growth of 76.9%. The 5-year profit CAGR of 84.8% is exceptional. The company maintains strong profitability metrics with ROCE at 36.8% and ROE at 27.4%, indicating efficient capital utilization.
The balance sheet is robust with zero debt, providing financial flexibility. However, concerning trends include negative free cash flow (latest: -₹64 crores) and deteriorating working capital metrics. Debtor days have increased from 86.7 to 110 days, and working capital days have expanded from 122 to 195 days, suggesting potential operational inefficiencies despite strong profitability.
At a PE ratio of 46.4x, Concord trades at a premium valuation, reflecting the market’s high growth expectations. The weighted valuation model combining DCF (₹1,636.94), P/E multiple (₹1,501.27), and P/B multiple (₹1,666) approaches yields a fair value of ₹1,602, suggesting the stock is slightly overvalued by 3.8%.
The DCF model assumes a 25% initial growth rate declining to 4% terminal growth, with a 12% discount rate. While the company’s growth trajectory supports premium valuation, the high P/B ratio of 8.81x and declining promoter holdings (from 73.53% to 67.06%) warrant caution.
Technical indicators present mixed signals. While the stock shows moderate upward momentum with positive moving average signals (price above both 50-day and 200-day MAs with a golden cross), the RSI of 81.65 indicates overbought conditions. The stock has experienced a significant 40.12% short-term uptrend with substantially increasing trading volumes (389.04% increase).
Immediate resistance levels at ₹1,695, ₹1,717.5, and ₹1,788 suggest limited near-term upside, while support exists at ₹1,661.35, ₹1,543.55, and ₹1,500.
Mitigation: Consider position sizing to limit exposure; implement trailing stop-loss at ₹1,543 (key support level)
The current price of ₹1,666 appears to fully reflect Concord’s strong growth prospects. Investors already holding positions should maintain but avoid adding at current levels. New investors should wait for a pullback to ₹1,500-₹1,550 range for a more favorable entry point.
Target Exit: ₹1,788 (resistance level, 7.3% upside)
Key Monitoring Metrics:
While Concord’s operational performance is impressive, the risk-reward profile at current prices suggests a HOLD recommendation is most prudent.