Indian Railways to open wagon procurement for private sector and foreign companies
Indian Railways is set to procure ~100,000 wagons worth ~Rs. 250 billion in the next five years. The railways have sought around 1,000 wagons a month, however the PSUs were able to supply only on average 443 wagons per month between January to May this year. The requirements for the wagons is expected to increase after the commissioning of the Eastern and Western freight corridors.
Further, Indian Railways also plans to go for 100 percent electrification by 2021-22 and become become net zero carbon emitter by 2030
Why is this important
This is important as the Railway minister has indicated that the wagon procurement sector would be opened up for private and foreign players as the requirement will increase once the dedicated freight corridors are in place.
Stock to be impacted
Opening up of the wagon procurement process is positive for private companies such as Titagarh Wagons Ltd (CMP: Rs 97, MCap: Rs 1125 crs, 41.6x FY2017 PE), Texmaco Rail and Engineering Ltd (CMP: Rs. 71, MCap: Rs. 1569, 59.1x FY2017 PE)