The usual fizz was missing for the stocks of railway equipment makers such as Kalindee Rail, Kernex Microsystems, Titagarh Wagons and Texmaco Rail on Railway Budget day.

Not only did these stocks fail to attempt their usual rally in the run-up to the >Railway Budget , they disappointed investors further by tanking sharply even as the Railway Budget was being read out.

Weak global markets and the continuing carnage in mid and small-cap stocks triggered sharp 7 to 12 per cent declines in ‘railway’ stocks such as Titagarh Wagons, Kernex Micro and Texmaco Rail during today’s session.

Budget proposals

Lack of concrete proposals in the Budget on significant passenger fare hikes that could substantially lift the Railways’ cash flows dampened the sentiment towards railway stocks. So did the shortfalls in implementation of investment plans against promises this year and the very modest investment plans for next year.

The sell-off gathered momentum as the speech wound to an end without any announcement on passenger fare hikes.

The Budget has proposed hikes in cancellation, reservation and tatkal fees to prop up passenger revenues, refraining from hikes in the base fare, which could have made a more material difference to the railways’ finances.

Budget document

A glance through the Budget documents shows that the sum that the railways has budgeted towards expansion and modernisation projects for 2013-14, which would translate into order flows for these equipment makers, are quite modest.

For instance, the sum budgeted for laying of new lines is at Rs 5,500 crore for 2013-14, lower than the Rs 5,949 crore spent this year. Spending budgeted for restoration of dismantled lines is at Rs 2,234 crore (Rs 2,549 crore).

Spending budgeted for gauge conversion got a 23 per cent higher allocation at Rs 3,278 crore. But this was still lower than the 2012-13 Budget. Sum set aside towards acquisition of locomotives and carriages has also been pruned.

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