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How does Railway Budget 2012-13 Impact Indian Companies / Equities ?

March 15, 2012

Even before the Budget, the Railways hiked the tariffs for Cement and Coal Transportation on March-6th. Cement Prices have now been hiked by Rs 10-25 per bag compared to last month to pass on the railway freight rates. Negative for Construction and Real Estate Sector as input Cost will Rise and may not be fully passed on to end customers.

Dinesh Trivedi iterated that the ministry’s focus for next 5 years would be towards- tracks, bridges, signaling, rolling stock and stations – investments in these areas should benefit companies like Titagarh Wagons, BEML, Texmaco Rail, Kernex Microsystems, Kalindee Rail Nirman, Siemens India, Stone India.

Proposed to develop 100 new railway stations via the PPP route in the next 5 years. Upgrade 929 stations, also proposed development of major stations – to benefit EPC and smaller asset developers

Specially designed coaches for differently-abled persons to be provided in each mail/ express trains; 75 new Express trains, additional services planned in suburban across Mumbai, Chennai, Kolkata, 21 new passenger services to be introduced (to benefit Coach/ Wagon manufacturers such as Titagarh Wagons, BEML, Texmaco Rail in the mid-to-long run).

To set up Logistics Corporation, for the development and management of existing railway goods sheds & multi-modal logistic parks (to benefit Gateway Distriparks).

Intend to spend Rs 391 bn towards modernization of the signals and another Rs 632.1 bn towards track modernization in the next 5 years (to benefit Kernex Microsystems, Crompton Greaves Siemens India).

Accelerating process for Dedicated rail freight corridor (DFC). Allocated 6,800 acres of land parallel to the existing railway network for DFC – L&T, Simplex infra, Kalindee Rail with almost all the companies related with Railway work.

2500 coaches to be equipped with bio-toilets – Positive for Escorts, which has pre-approved bio-toilet.

OK, these are all the companies identified which are eligible to secure the projects based on Budget Proposals. A lot depends on Bribing the Ministry and Bureaucrats to get the Project Allotted, Execution within Budget and left over will be profit to the company and will be reflected as EPS for Investors. We do not believe in companies which are at completely the mercy of Pathetic & Paralyzed Government like that of Dr. Manmohan Singh and we personally AVOID and advise others to carefully research before investing.

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