Railway-related stocks plunged as the railway budget failed to enthuse investors. Stocks like BEML, Hind Rectifiers, Stone India, Texmaco and Titagarh Wagons lost between 5-17% over the past week and continued falling after the budget as proposals were not seen having an immediate revenue impact. Analysts said steps announced in the budget would have no immediate benefits for container operators. However, some analysts remained optimistic about the long-term opportunities from proposals like setting up new factories and expanding rail networks through public-private partnerships.

1. Rly-linked stocks plunge as budget fails to enthuse
By Kumar Shankar Roy Feb 24 2010 , New Delhi
Investors dumped railway-related stocks, which continued their weeklong fall, as they feared the
proposals announced by the railway minister Mamata Banerjee will not have an immediate
impact on the companies’ revenues.
The stocks of BEML, Hind Rectifiers, Stone India, Texmaco and Titagarh Wagons — which fell
between 5 and 17 per cent in the past seven sessions — lost another 5 to 7 per cent on
Wednesday. However, Concor, Gateway Distriparks, Gati were spared by investors.
The volumes of shares traded for most railway-related counters were two to nine times of one-
week average, indicating build-up positions that got offloaded on Wednesday.
Bhoomika Nair of IDFC SSKI said the steps announced in the Rail Budget would have no
immediate benefits for container rail operators. “We believe while the above measures have no
immediate benefits for container rail operators, it will enable container operators to improve their
turnaround times if the overall infrastructure of railways improves. This will help improve
profitability of container rail operators,” Nair said.
Moreover, the operators will be encouraged to set up freight terminals and logistics park, which
will enable operators to consolidate cargo for their rail operations. “We maintain our
‘outperformer’ rating on Concor, Gateway Distriparks and Arshiya,” she said.
“There is a tremendous opportunity and huge potential for companies such as Texmaco. The
stock market is a little sensitive to the news that five new coach factories will be set up, but as far
as we are concerned, the future is very bright for us,” said Ramesh Maheshwari, vice-chairman
of Texmaco.
Banerjee proposed to set up five state-of-the-art wagon factories at Secunderabad, Barddhaman,
Bhubaneshwar, Kalahandi, Guwahati and Haldia under PPP/JV mode, which was interpreted as
signs of increased competition by analysts.
Citigroup analyst Rohini Malkani termed the Vision 2020 plan to add 25,000 km network
through government funding and through private partnership as ‘ambitious’. “While the
Railways will be setting up a task force to clear investment proposals within 100 days of
submission, we view the plans as ambitious given the resource constraints, and limited success
so far via the PPP route,” Malkani said.

2. Kalindee Rail Nirman’s director (business development), Arvind Gemini, said he expects the
company to receive contracts when the railways invite tenders for freight corridor. “There are
opportunities for companies like ours in the budget target of 1,000 km of new rail routes every
year,” he said.
Dinesh Thakkar, CMD of Angel Broking, felt the intent of the budget to set up private freight
terminals and multi-modal logistics and mega logistics hubs will be beneficial for rail container
operators.
“Before a major event, investors build up long positions in their favourite stocks. When it does
not go according to their plans, they dump the stocks. The railway budget may have been seen
negatively by investors,” said Jagannadham Thunuguntla, equity head with New Delhi-
based merchant bank SMC Capitals.