Indian Railways is set to put out its tender for procurement of 22,000 wagons at a cost of at least Rs. 7,000 crore in the current financial year. The orders would be through the reverse e-auction model, and if the lowest bidder isn’t able to serve the entire order, the second lowest bidder would get a chance without a fresh tendering process.
Why is this important?
Railways is ramping up its freight carrying capacity by 1100 million tonne in the next two years as it is hoping to complete the construction of 3,300 km-long dedicated freight corridors by 2020. On an average, Railways procures 8,000 wagons every year. Companies like Texmaco Rail and Engineering, Titagarh Wagons in the listed space could see big orders among the others.
How the stocks will be impacted?
Wagon manufacturing business of companies was hit by inadequate orders in past couple of years. With massive orders to be tendered by Railways, companies are expected to win huge orders from Railways. Stocks will be impacted in a positive manner.
Texmaco Rail (CMP Rs. 70.8, M Cap Rs. 1,556 crores, PE 12.6x FY20E)