The Hindu Business Line : Rail-related stocks on a roll

Market participants say investors are bullish on these companies as they are betting on the proposed dedicated freight corridor project. There are also talks of these companies getting large order from the Indian Railways.

Kalindee Rail Nirman has gained nearly 67 per cent during the last week. The company, which is into telecommunication and railway tracks and executes civil works of rail infrastructure facilities on turnkey basis, jumped 7.84 per cent on Friday to Rs 557.90.

Kernex Microsystems, which is engaged in the business of manufacturing, installing and maintaining of anti-collision systems as well as conceptualising, designing and developing certain railway safety and signal systems for Konkan Railway Corporation Ltd, has gained 10 per cent in the last one week. Stone India, supplier of air brake systems, has jumped 14 per cent in last one week.

Texmaco, a KK Birla group company and a joint venture partner of Australian firm United Group Ltd for wagon manufacturing, gained 6.09 per cent during the last one week.

Order Book

All these counters have been witnessing improvement in trading volumes also. According to Mr V.K. Sharma of Anagram Stockbroking, the main trigger for these stocks is the proposed implementation of freight corridor project that could shore up order book for these companies.

Kalindee Rail Nirman Engineers, along with Korean firm Samsung, has recently bagged a Rs 81-crore order from Delhi Metro Rail Corporation to implement the automatic fare collection system for Delhi Metro’s Phase-II operations. This order, for which Delhi Metro has issued a letter of intent, further firms up Kalindee Rail’s present order book of Rs 450 crore, according to sources in the company.

Fare Collection

While the project size may not be impressive, this project would provide Kalindee Rail with the requisite experience to technically qualify and bid for such fare collection projects across the world.

Incidentally, for the automatic fare collection project of Delhi Metro Phase-I, Kalindee Rail was the sub-contractor for a French firm that had implemented the project.

Mr Lalu Prasad, Railway Minister, said recently “in an effort to decongest the existing Railway lines, the Railway Ministry has planned to lay dedicated freight corridors (DFC) for goods trains.”

According to market men, pre-Budget rally has set in for these stocks as they expect the ensuing Railway Budget to focus more on new projects and on safety measures.

Financing plan

“Safety record is very low. To improve that the Railways will have to spend on anti-collision devices and technologies,” said Mr V.K. Sharma.

According the Japanese International Co-operation Agency (JICA) estimates, which conducted the feasibility report for the Eastern and Western corridors of freight corridor project, the project would cost Rs 50,000 crore. The costs include land acquisition, construction cost, rolling stock cost, operation and maintenance cost.

However, the financing plan for the project has not yet been firmed up and the DFC project is yet to get the final Cabinet approval.

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