KEC International bags Orders worth Rs.1,931 Crore

MUMBAI: Engineering, procurement and construction major KEC International today said it has won new orders worth Rs 1,931 crore.

The company has secured a new order of Rs 1,756 crore, KEC International said in a BSE filing.

Its transmission and distribution business won orders worth Rs 1,756 crore across India, SAARC, the Middle East, Africa and the Americas, it added.

The cable business secured orders worth Rs 112 crore while the railways and solar businesses received orders worth Rs 54 crore and Rs 9 crore respectively.

KEC International, an RPG Group firm, is a global infrastructure EPC major. It has presence in power transmission and distribution, cables, railways, water, renewables and civil.

Shares of the company were trading 2.84 per cent higher at Rs 295.40 on BSE.

Kernex Microsystems (India) Limited (532686) Rises 5% on Sept 3

MUMBAI: Shares of Kernex Microsystems (India) Limited (BOM:532686) last traded at 36.75INR, representing a move of 5%, or 1.75INR per share, on volume of 10,934 shares. After opening the trading day at 35INR, shares of Kernex Microsystems (India) Limited traded in a close range. Kernex Microsystems (India) Limited currently has a total float of 12.50 million shares and on average sees shares exchange hands each day. The stock now has a 52-week low of 31.5INR and high of 60INR.

Kernex Microsystems Limited is an India company, which is engaged in the manufacture and sale of safety systems and software services for railways. The company has market cap of $454.02 million. The Company’s principal activities include operational maintenance of anti-collision devices for railways; supply of Train Collision Avoidance Systems (TCAS) units, and installation of Lxcs Gates for Egyptian National Railways. It currently has negative earnings. The Firm provides a range of value-added embedded research and development (R&D) services and electronics manufacturing services (EMS/CEM) to its customers.

BEML hits new 52-week high as Cabinet approves new Metro Rail policy

BANGALORE: PSU stock BEML has moved higher on impressive volumes on Thursday, riding on news that the Union Cabinet has approved new metro rail policy. The government’s new policy aims to expand the metro network across various cities in the country through Public-Private Partnership model. The plan looks at construction of new Metro Rail systems via the Design-Build-Finance-Operate-Transfer mode and allowing private players to operate the service and involving them works such as  maintenance and upgrading of infrastructure.

BEML already has a pretty strong order book and with the new policy on Metro Rail set to result in more order inflow for the company, the stock may well go on to test higher levels in the near to medium term.

The company announced that its order book’s value stood at Rs 7582 crore at the beginning of the June 2017-18 quarter and during the quarter it bagged orders worth Rs 815 crore.

The company executed orders worth Rs 632 crore in the April – June quarter. As on 30 June 2017, the order book value stood at Rs 7765 crore. Out of this, the company has execute orders worth Rs 2388 crore during the current fiscal and the rest, Rs 5377 crore worth of orders, in the next financial year.

BEML had reported a net loss of Rs 85.13 crore for the quarter ended June 2017, as against net profit of Rs 186.40 crore in the preceding quarter. In April – June 2016 quarter, the company had posted a loss of Rs 107.10 crore.

At Rs 1868, off the day’s high of Rs 1879, BEML is now up 8.8% from its previous closing price. More than 3.1 lakh shares have changed hands so far at the BEML counter on BSE today, about 3.3 times the average daily volume of 0.91 lakh shares. On the National Stock Exchange, the BEML counter has clocked a volume of nearly 3.2 million shares so far in the session. Th stock touched a new 52-week high of Rs 1880 on NSE today.

CONCOR advances after reporting good Q1 numbers

NEW DELHI: Container Corporation of India Ltd (CONCOR) gained 3.47% to Rs 1,187 at 9:54 IST on BSE after net profit rose 36.4% to Rs 243.38 crore on 9.9% increase in net sales to Rs 1456.80 crore in Q1 June 2017 over Q1 June 2016.

The result was announced after market hours of 31 July 2017.

CONCOR provides logistics solutions. It has the largest network of inland container depots (ICDs)/container freight stations in India. In addition to providing inland transport by rail for containers, it has also expanded to cover management of ports, air cargo complexes and establishing cold-chain. The Government of India (GoI) holds 54.8% stake in CONCOR (as per the shareholding pattern as on 30 June 2017).

HCC-URC Construction JV awarded Rs.798 Crore contract from Bangalore Metro Rail Corporation

HCC surges 4% as JV bags major contract from Bangalore Metro Rail Corp. The company in the joint venture with URC Construction.

BANGALORE/MUMBAI: Hindustan Construction Company announced that the Company’s JV with URC Construction has been awarded a Rs 797.29 crore contract by the Bangalore Metro Rail Corporation. HCC’s share in the JV is 51% (Rs 406.61 crore). The project is to be completed in 36 months.

Shares of Hindustan Construction Company (HCC) surged 4.7 percent intraday Monday as its joint venture company has bagged an order worth Rs 798 crore. The company in the joint venture with URC Construction has been awarded Rs 797.29 crore contract by the Bangalore Metro Rail Corporation.

The company has 51 percent share in the joint venture which is approximately Rs 406.61 crore of the total contract value. The said project is to be completed in 36 months. The contract is for the construction of 6.34 Km long elevated corridor and 5 elevated stations between HSR Layout station and RV Road station. The five stations on this section are Central Silk Board, BTM Layout, Jayadeva Hospital, Ragigudda and RV Road. The contract also includes, the construction of road-cum-rail flyover, road widening and allied works.

This is a part of the fully elevated 18.82 km RV Road to Bommasandra section of the Phase II of Bangalore Metro Rail Project. The total length of Phase II is 72.095 km out of which 13.79 km is underground. This phase has 6 sections with 61 Stations out of which 12 stations are underground.

Arun Karambelkar, president & CEO-E&C of HCC said, “We are confident of completing the project well on time as we plan to go on with our task in a systematic and efficient manner.”

Shares of the company gained Rs 1.45, or 3.72%, to trade at Rs 40.45. The total volume of shares traded was 521,767 at the BSE (10.55 a.m., Monday). At 10:55 hrs Hindustan Construction Company was quoting at Rs 40.45, up Rs 1.45, or 3.72 percent on the BSE.

Man Infracon bags Order worth Rs.91.92 Crore from Indian Port Rail Corp.

MUMBAI: Man Infraconstruction Limited has received an order worth Rs. 91.92 Crore from Indian Port Rail Corporation Limited, a Government of India Enterprise for execution of Development of Integrated Common Rail Yard Facility at JNPT, Navi Mumbai, Maharashtra.

In a filing to the Bombay Stock Exchange the company said “Man Infraconstruction Limited has received an order worth Rs 91.92 crore from Indian Port Rail Corporation Limited a Government of India Enterprise for execution of ‘development of integrated common rail yard facility’ at JNPT Navi Mumbai Maharashtra.” (Click here to see the company’s intimation to BSEMan Infracon Letter to BSE).

Man Infraconstruction is a construction company with over 5 decades of experience in providing construction services for Port infrastructure, Residential, Industrial, Commercial and Road infrastructure Projects.

It is a leading construction company in the country that has executed construction work for some of the most significant port projects in India. The company continue to alter the structural landscape through several other prestigious projects in the residential commercial institutional and industrial space as well.

Meanwhile shares of the company closed at Rs 48.25 apiece up 3.10 per cent from previous close on BSE.

Railway-linked Stocks surge after Railway Minister announces Freight Reforms

Reacting to the development, the stock of Titagarh Wagon rallied nearly 6% to Rs.109 on the Bombay Stock Exchange!
Suresh Prabhu, Union Minister of Railways

NEW DELHI: Shares of Railway-linked stocks such as Titagarh Wagon and Texmaco Rail soared up to 6% after the railway minister Suresh Prabhu presented Indian Railways Freight and Passenger Business Action Plan 2017-18, which railway officials are terming as “mini-budget”.

Reacting to the development, the stock of Titagarh Wagon rallied nearly 6% to Rs 109 on the BSE, while Texmaco Rail & Engineering gained 4% to Rs 93.

Stone India and  Kernex Microsystems advanced 5% each to Rs 65 and 43, respectively.

Outlining the Railways outlook for the financial year 2017-18, Prabhu said Railways will offer discounts on the long-term freight contacts, which will range between 1.5% and 35% as per incremental growth in gross freight revenues.

Long-term tariff agreements will be for three-four years, he added.

Prabhu aims to launch Bangladesh-India freight train this year, and also plans to convert 25 stations to ‘digital stations’.

Soon Railways will move towards Aadhaar-based ticketing system, he added.

Railway Board has a lot of things to do before Listing IRCTC, IRFC & IRCON

NEW DELHI: Union Finance Minister Arun Jaitley may have announced the government’s intention to list the three railway public sector undertakings (PSUs) — IRCTC, IRFC and IRCON — but a closer look at the financials of the three throws open some challenges. Sources in the Rail Bhawan said Jaitley’s announcement to list the three rail PSU in 2017-18 came as a “surprise to many” including those in the railway board, the apex decision making body.

When asked to explain the impact of such a move, experts were divided. “The budget has outlined the intentions regarding the PSUs. The intentions are all well-meaning and a step in the right direction,” Abhaya Agarwal, partner, infrastructure and PPP, EY told during a post-budget round table. Manish R Sharma, Partner, PWC underlined the fact that Indian Railway has not been in a “very good shape” as they have been losing a lot of traffic and hence their revenue. “The composition of freight traffic is also changing. Coal, the bread and butter of railways, has seen a shift to road transport. Capital needs to roll out as there are lots of projects that need to be completed,” Sharma said.

Another expert on railway finances gave a very realistic picture of things to come following the announcement made in the budget speech on listing of rail PSUs. “A formal proposal will be drafted and shared with the railway ministry. The railway ministry will forward the same to the railway board for discussions and feedback. All suggestions, inputs or objections, if any, will then be shared with the department concerned in the finance ministry. Once all aspects are discussed and finalized, a Cabinet note will be prepared and circulated for any final comments from all ministries before the subject is approved by the Union Cabinet. Post that, the listing etc. will happen,” the expert and a formal railway ministry official said adding all this could take anywhere between three to nine months.

Let’s briefly examine the three PSUs in question.

IRCON (Indian Railway Construction Company Limited): IRCON, established in 1976, is an engineering and construction company, specialized in transport infrastructure. It is a wholly owned entity of the Ministry of Railways. Its primary charter was the construction of railway projects in India and abroad. In the past two decades, IRCON has diversified into other transport and infrastructure segments and operates even outside India.

A closer look at IRCON’s financial highlights shows that its total income has been on a decline since 2012-13 till 2015-16. In FY13, IRCON International posted a total income of Rs 4,471 crore. But in FY16, its total income was reported at Rs 2,703 crore, a decline of almost 40 per cent over four financial years. This impacted the net profit too, according to the financial performance reported on its official website. In FY13, the company posted a net profit of Rs 730 crore. But four years later, in FY16, its net profit was at Rs 379 crore.

Explaining the decline in income and profitability, Mohan Tiwari, chairman and managing director, IRCON said this was primarily due to “completion of mega foreign projects”. “Your company recorded an operating turnover of Rs 2,403 crore during 2015-16. Foreign projects have accounted for 18 per cent of this turnover, which is 51 per cent less than the previous year’s contribution by such projects. There has been a corresponding fall in the profit before tax which stood at Rs 567 crore, registering a decline of 33 per cent approx.,” Tiwari stated in the company’s latest annual report. He went on to state that “The company is confident of surmounting the decline in the turnover and profitability with sizeable order book of more than Rs 17,000 crore.”

IRFC (Indian Railway Finance Corporation): As the name suggests, IRFC is a finance arm of the Indian Railway and raises financial resources for expansion and running through capital markets and other borrowings. Of the three, IRFC is perhaps in best of financial health. In 2015-16, it reached a landmark in asset financing with a cumulative funding to the rail sector crossing Rs 1.5 lakh crore.

During 2015-16, IRFC funded Rs 14,000 crore worth of acquisition of locomotives, passenger coaches and freight wagons.

Profit after Tax of the company registered an year-to-year growth of 11.92 per cent to Rs 848.69 crore for 2015-16 as against Rs 758.30 crore for 2014-15. “The higher year-to-year growth in PAT as compared to PBT, is attributed to higher incidence of Deferred Tax Liability, due to increase in effective corporate tax rate to 34.608 per cent from 33.99 per cent, leading to additional provision towards DTL to the tune of Rs 77 crore on account of revaluation of accumulated DTL pertaining to earlier years in the accounts for the year 2014-15,” the chairman Sanjoy Mookerjee explained in the company’s latest annual report.

Apart from profitability, IRFC continues to enjoy the highest credit rating from the three leading Credit Rating Agencies, According to Mookerjee, during FY16 the company was accorded highest possible ratings, both for its long term and short term domestic borrowings programme. For the long term domestic borrowings, the company was awarded “CRISIL AAA/Stable rating by CRISIL, “(ICRA) AAA” rating by ICRA and “CARE AAA” ratings by CARE. “Similarly, the company’s short term domestic borrowings were rated “A1+” by CRISIL, ICRA and CARE. Besides, the three prominent International Credit Rating Agencies namely Standard & Poor’s, Moody’s and FITCH have awarded to IRFC “BBB-(Stable)”, “Baa3 (Positive)” and “BBB-(Stable)” respectively rating at par with the Sovereign. ,” he said in the report.

IRCTC (Indian Railway Catering and Tourism Corporation): Recently, Railway Minister Suresh Prabhu had said that IRCTC, which is already one of the largest e-portals in India, could become as huge as the e-commerce giant Amazon. He had added that the website would start online selling hand-made products procured from rural women. Indeed, that being true, IRCTC, once listed, is expected to give healthy returns to its shareholders. Currently, 6 out of 10 rail tickets are booked online on IRCTC website. However, post demonetization first and later in his budget speech, Jaitley has proposed abolishing the service charge on tickets booked on IRCTC. This will be a major dampener for the company as one-third of its revenue come from Service Charge. IRCTC sold tickets worth Rs 24,022 crore in 2015-16, earning a revenue of Rs 1,506 crore. Service charge accounted for over one-third of IRCTC’s total earning in the year at Rs 551 crore.

“Going forward, IRCTC may have to depend on the sale of food, water, and licences issued to various food vendors to make up for the loss in revenue stream from Service Charge. This will be a challange for IRCTC and also to the investors post its listing,” said a former rail official.

Titagarh Wagons shares up on Q3 Profit

The stock opened at Rs. 117 against the previous close of Rs. 110.25 and hit a high of Rs. 117.95.

At about 10.25 am, the stock was up 4.17 per cent or Rs. 4.60 at Rs. 114.85.

The company has reported a profit of Rs. 3.28 crore in the October-December quarter compared with a loss of Rs. 39 lakh for the same period last year.

The company has got a Letter of Intent from the National Institute of Ocean Technology, Ministry of Earth Sciences, for construction and delivery of two coastal research vessels worth Rs. 100 crore.

As of Monday’s close, the stock has fallen 21.7 per cent in the past one year.

Subros bags Order to supply AC kits from Indian Railways

The company will supply 360 kits to Indian Railways’ Diesel Locomotive Works (DLW), Varanasi. Company hits 1-year high on order win from Indian Railways at BSE

NEW DELHI: Subros Ltd, which supplies cab mounted HVAC units to railways for driver cabin applications, has received an order to supply 360 AC kits from Indian Railways’ Diesel Locomotive Works (DLW), Varanasi.

“The company has received a major order of 360 kits from Indian Railways – DLW, Varanasi. The company has made efforts for development of products to meet the requirements of DLW & CLW (Chittaranjan Locomotive Works) and expects continued business from Indian Railways in future also,” said Subros in a BSE statement.

The Diesel Locomotive Works in Varanasi manufactures diesel-electric locomotives and its spare parts. On the other hand, Chittaranjan Locomotive Works (CLW), located at Asansol (West Bengal), manufactures electric locomotives.

Subros Ltd – a joint venture between Suri family (40 percent), Denso Corporation (13 percent) and Suzuki Motor Corporation (13 percent) – supplies air conditioning systems and thermal products to automotive industry in India. The company manufactures compressors, condensers, heat exchangers and all connecting elements required to complete AC loop and caters to segments such as passenger vehicles, buses, trucks, refrigeration transport, off- roaders & railways.

Share price of Subros touched 52-week high of Rs 194.95, surges 6.3 percent intraday Friday on bagging major order from Indian Railways.

“The company has made efforts for development of product to meet DLW’s and CLW’s requirements and expects continued business from Indian Railways in future also,” it added.

The company’s standalone Q3 (Oct-Dec) net profit declined 45.59 percent at Rs 3.27 crore against net profit of Rs 6.01 crore in the same period last fiscal.

Subros is a leading manufacturer of automotive air conditioning systems and thermal products for automotive applications in India. The company has also been supplying cab mounted HVAC units to Indian Railways for driver cabin application. It has manufacturing plants at Noida, Manesar, Pune, Chennai and Sanand with an annual capacity of 1.5 million AC kits per annum.

At 10:36 hrs Subros was quoting at Rs 189.60, up Rs 6.60, or 3.61 percent on the BSE.

Union Budget 2017-18: J Kumar Infra up 5% on 25 Stations Redevelopment Plan

Finance Minister Arun Jaitley in Union Budget 2017-18 has announced that the contract for re-development of atleast 25 stations will be awarded in 2017-18.

NEW DELHI: Shares of J Kumar Infraprojects and ITD Cementation India gained 2-5 percent on Wednesday as government will provide re-development of 25 stations in 2017-18.

Finance Minister Arun Jaitley in Union Budget 2017-18 has announced that the contract for re-development of atleast 25 stations will be awarded in 2017-18.

The government is propose to invest Rs 1.31 lakh crore in railways in 2017-18, out of which Centre will fund Rs 55000 crore of railway infra budget.

The Railway Budget has presented by Finance Minister Arun Jaitley in Parliament today which has been merged with the General Budget.

At 11:56 hrs J Kumar Infraprojects was quoting at Rs 230, up Rs 5.20, or 2.31 percent and ITD Cementation India was quoting at Rs 163.60, up Rs 3.10, or 1.93 percent.

Rail Stocks decline 3-5% ahead of Rail Budget-2017

MUMBAI: Shares of rail-related companies are in focus as the Rail Budget will be presented in the Parliament today. Finance Minister Arun Jaitley will present the first Rail Budget subsumed in the General Budget today.

Shares of Texmaco Rail, Kalindee Rail Nirman, Titagarh Wagons and Kernex Microsystems were down 3 percent to 5 percent intraday on Wednesday.

Investors are looking for a safety fund for railways reeling under a series of deadly derailments, development of new lines, station redevelopment and setting up of Rail Development Authority and High Speed Rail Authority in the Rail Budget.

Jaitley is likely to give more focus on infrastructure development such as new lines, doubling, station redevelopment, safety upgradation. Reeling under a series of derailments, the Budget is likely to announce creation of a separate safety fund of about Rs 1 lakh crore over the next five years out of which Rs 20,000 cr will be earmarked for 2017-18, according to sources.

At 09:25 hrs Texmaco Rail was quoting at Rs 104.75, down 1.78 percent, Kalindee Rail Nirman was quoting at Rs 112 down 1.71 percent.

Titagarh Wagons was quoting at Rs 113.05, down 2.46 percent and Kernex Microsystems was quoting at Rs 37.95, 4.89 percent.

Rail stocks gain on buzz of cabinet approval for merger of Rail & Union Budget

Rail StocksMumbai: Shares of eight companies whose fortunes are linked to orders from Indian Railways rose by 0.06% to 4.56% at 14:10 IST on BSE after reports the Union Cabinet allowed merger of the Railway Budget with the Union Budget.

Meanwhile, the S&P BSE Sensex was up 44.52 points or 0.16% at 28,567.32.

NELCO (up 1.02%), Kalindee Rail Nirman (up 2.45%), Titagarh Wagons (up 3.54%), Stone India (up 4.56%), Texmaco Rail & Engineering (up 1.98%), Zicom Electronic Security Systems (up 1.65%), Kernex Microsystems (up 2.93%), and BEML (up 0.06%) gained. Hind Rectifiers fell 1.71%.

The Union Cabinet today, 21 September 2016, reportedly cleared a proposal for merger of the Railway Budget with the Union Budget.

The Cabinet also reportedly cleared a proposal to remove the distinction between plan and non-plan expenditure in Budget.

The government has also advanced the date for Budget presentation, according to reports. However, it is yet to announce the date.

MIC Electronics surges 20% on Display Network order

“MIC Electronics, Leyard Optoelectronic (Beijing) and Associated Advertising, led by MIC has been selected by RailTel Corporation of India, for conducting proof of concept phase of proposed network for six months at Vadodara, Ahmedabad, Allahabad, Naini and Jasra Stations,” says the Hyderabad-based company in its filing.

MIC Electronics shares shot up 20 percent intraday Monday on railway display network order from the government company.

MIC Electronics“MIC Electronics, Leyard Optoelectronic (Beijing) and Associated Advertising, led by MIC has been selected by RailTel Corporation of India (Ministry of Railways), for conducting proof of concept phase of proposed network for six months at Vadodara, Ahmedabad, Allahabad, Naini and Jasra Stations,” says the Hyderabad-based company in its filing.

Railway display network project that envisages networking of about 90,000 digital display screens on more than 2,000 railway stations across the country, is estimated to cost around Rs 2,000 crore.

Network is primarily meant for displaying information related to passenger amenities, comfort, convenience and safety. Display infrastructure will also be utilised for commercial advertising. At 15:05 hours IST, the scrip of MIC Electronics was quoting at Rs 21.95, up Rs 3.25, or 17.38 percent amid high volumes on the BSE.

IRFC’s Tax-free Bonds Oversold Four Times higher than planned

irfc tax free bondsMumbai: Indian Railways Finance Corporation’s tax-free bonds were oversold, almost four times higher than it had planned. With this, the issuer marked the season’s end although the issue would remain open for subscription till Monday next as the retail portion is not fully subscribed.

The company on Thursday received bids for Rs 9,452 crore against Rs 2,450 crore, the total issue size.

However, the retail portion, which was 60% of the size, was not fully subscribed, and limited to 0.72 times till Thursday.

Earlier on Wednesday, another state-owned entity National Bank for Agriculture and Rural Development opened similar tax-free bond subscription but only to raise Rs 3,500 crore. It has so far received bids for Rs 14,072 crore, four times higher than the actual size. But, it too fell short of retail subscriptions, which are now at 0.82 times of the investment limit.

Both bonds are offering rates at 7.29-7.64% with 10 and 15-year maturities.

“The residual retail limits would be over by next few days as the issue remains open,” said Ajay Manglunia, executive vice president-fixed income at Edelweiss Finance. “There’s no ebbing of investor interest. It is just that some equity investment options have taken away some retail money.”

For instance, the government sold 5% stake in Container Corporation of India (Concor) through the Offer for Sale route. It too has oversubscribed tapping retail money. Also, investors are partially flocking back to equities with the Sensex rising since the budget announcements.

“Residual retail limits do not suggest any ebbing of invest appetite but a question of temporary liquidity matter amid the government’s disinvestment plans,” said Deepak Panjwani, head of debt markets at GEPL Capital.

The government allowed the additional fund raising on condition that a higher portion of the issue is set aside for retail investors, who can buy up to 60% of these bonds compared with 40%  in earlier issues sold this financial year.

Govt to sell 5% Stake in CONCOR

The government will sell 5% stake in Container Corporations of India (CONCOR) at a minimum price of Rs 1,195 a piece, to garner Rs 1,165 crore

CONCOR ICD trafficContainer Corporation of India  Ltd (CONCOR) announced that President of India, acting through the Ministry of Railways, Government of India) has submitted to BSE a Notice of Offer to sell up to 97,48,710 equity shares of the Company of face value of Rs.10 each, representing 5% of the total paid up equity share capital of the Company (“the Offer Shares”) on March 09, 2016, (for non-Retail Investors) and March 10, 2016 (for Retail Investors and non-Retail Investors.

The floor price for the Offer shall be Rs.1195 (Rupees One Thousand One Hundred and Ninety Five) per equity share of the Company.

Container Corporation Of India Ltd ended at Rs. 1226.65, down by Rs. 6.65 or 0.54% from its previous closing of Rs. 1233.3 on the BSE.

The scrip opened at Rs.1220 and touched a high and low of Rs.1260.7 and Rs.1200.55 respectively. A total of 102474 (NSE+BSE) shares were traded on the counter.

The current market cap of the company is Rs.24045.65 crore.

The BSE group ‘A’ stock of face value Rs.10 touched a 52 week high of Rs.1944 on 01-Jun-2015 and a 52 week low of Rs.1050.85 on 12-Feb-2016. Last one week high and low of the scrip stood at Rs.1253 and Rs.1146 respectively.

The promoters holding in the company stood at 61.79 % while Institutions and Non-Institutions held 35.08 % and 3.12 % respectively. The stock traded below its 200 DMA.

Zicom Electronic gains as Rail Budget proposes CCTV Surveillance in Railway Areas

The stock moved higher by 7% to Rs 75 on the BSE after the government proposes to setup CCTV surveillance

cctv in railwaysZicom Electronic Security Systems has moved higher by 7% to Rs 75 on the BSE after the Rail Budget proposed to setup CCTV for surveillance.

Railway Minister Suresh Prabhu in Railway Budget said that the government will ensure CCTV coverage at all Tatkal counters to prevent abuse of system where passengers are denied tickets.

Zicom Electronic Security Systems engaged in the business of electronic security systems.

The company offers customised solutions to meet security needs of the customers in the application areas such as Instrusion & Burglar Alarm, Access Control, Fire Detection, CCTV Surveillance, Electronic Article Surveillance, Remote Video Surveillance, Integrated Building Management, Car Park Management and Smart Card Solutions.

The above systems are designed to meet the security needs of residential, retail, commercial and industrial customers.

At 12:54 PM, the stock was up 5% at Rs 73.35 on the BSE as compared to 0.25% decline in the S&P BSE Sensex. A combined 94,539 shares changed hands on the counter on the BSE and NSE

Rail Budget 2016-17: Stock Market in two minds about how to react

SENSEX sheds 56 points as Railway Minister Suresh Prabhu begins his Railway Budget 2016-17 speech in the Parliament

New Delhi: The stock market quickly showed mix reaction to Suresh Prabhu’s second Rail Budget, with the Sensex falling 30-odd points minutes after the Railway Minister started his speech in Parliament. Dalal Street was expecting Prabhu to increase capital outlay substantially to improve railway infrastructure and safety measures.

Stocks of railway related companies like Titagarh Wagons, Timken India, Texmaco Rail and Engineering, BEML, Kalindee Rail, Alstom T&D India, Hind Rectifiers and Stone India were trading mixed today after a rally seen yesterday in run up to the Budget.

Titagarh Wagons was down 2.06 per cent at Rs 121.20, Timken India up 1.56 per cent at Rs 447, Texmaco down 3.7 per cent at Rs 126.20, BEML down 0.53 per cent at Rs 1,012.60, Kalindee down 3.56 per cent at Rs 130.20 and Stone India up 1.77 per cent at Rs 69.15.

Expectations are higher from Railway Budget than the Union Budget as the the government has laid thrust on improving railway infrastructure for sprucing up economic growth.

Railway Minister Suresh Prabhu has announced plans to spend $132 billion on railways in the next five years. There are expectations that he is likely to increase the overall capital outlay for Indian railways by 20-25 per cent to Rs 1.25 lakh crore, with a thrust likely on improving rail infrastructure, safety and upgrading the current rolling stock .

Shares of railway-related technology firms MIC Electronics, Zicom Electronic and Stone India advanced 5.94 per cent, 3.02 per cent and 1.40 per cent, respectively. Some of the prominent names in this space have fallen as much as 80 per cent this year. Most of them have fallen in the runup to the Rail Budget.

Rail Stocks BSE“There has been a delayed pre-budget rally in the railway stocks. But the other part is that these stocks did not fall as much as the rest of the midcap universe. All of these stocks have not fallen in the same magnitude as other smallcap and midcap stocks, which have actually cracked,” said Sandip Sabharwal of www.asksandipsabharwal.com.

Sabharwal expects companies linked to the railways to benefit largely from the strong order inflow expected from the Ministry of Railways. “There is expectation that the Rail Budget will lay out some capital expenditure plans and order flows could be pretty strong going forward,” he said.

The Rail Budget, which will be presented on Thursday, is unlikely to see any fare hike, but a slew of new measures, including a semi-fast train are on the anvil, industry trackers said.

Analysts also expect the government to rationalise some of the concessions in the Budget, an ET Bureau report said.

Nirav Sheth, HoR, Institutional Equities, Edelweiss Financials, expects the EPC (engineering, procurement & construction) companies to emerge as the major beneficiaries of the Budget.

“My sense is that lot of these EPC companies, if you think there is enough orders coming in from the Railways, will try and figure out how build railway tracks, and benefit,” he said, adding that “what seems to be cyclical at this point of time could well turn out to be structural. You can have years of order book remaining robust.”

Fears of spending cuts dent railway stocks

Rail StocksMumbai: Fears of spending cuts, coupled with lower revenue realisation in the upcoming railway budget dented the sector specific stocks on Wednesday.

According to market observers, stocks of companies associated with the railways ended the day’s trade in the red.

“There is a general expectation that the railways has not met its earlier revenue targets due to shortfall in traffic and weak economic sentiment, despite low fuel costs. This might have spooked investors,” Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services told.

According to James, investors’ sentiments were further subdued over assumptions that the central government might not announce big ticket capital expenditure projects in the railway budget due to be presented to parliament on Thursday.

“The government might not go in for big ticket projects, so as to meet its fiscal deficit targets. This adversely impacted investors’ risk taking appetite,” James added.

Vaibhav Agarwal, vice president and research head at Angel Broking, elaborated that fiscal constraints and lower expectations from the upcoming budget has led to correction across railway stocks.

“We expect some positive announcements, like encouragement of private sector participation in the railways, update on dedicated freight corridors and increased emphasis on usage of technology,” Agarwal noted.

During the day’s trade, shares of major firms associated with the railway sector like Siemens, Reliance Industrial Infrastructure, ABB India, HCC and L&T declined at the Bombay Stock Exchange (BSE).

Stocks of Siemens declined by 2.29 percent to Rs.993.85 from its previous close of Rs.1017.10.

Similarly, scrip of Reliance Industrial Infrastructure dropped by 1.21 percent to Rs.385.30 from its previous day’s close at Rs.390.

Scrip of ABB India fell by 0.61 percent to Rs.1,077.25 from its previous close of Rs.1,083.85.

Shares of Hindustan Construction Corporation (HCC) slipped by 0.57 percent to Rs.17.35 per equity share from the previous close of Rs.17.45.

Larsen & Turbo (L&T) stocks declined by 1.49 percent to Rs.1,113.25, from its previous close of Rs.1,130.10.

In contrast, Bharat Earth Movers Ltd. (BEML) stocks rose by 0.47 percent to Rs.1,017.95 from its previous close of Rs.1,013.15 per equity share.

In the logistics space, shares of Timken and Container Corporation of India (Concor) dropped, and those of Gateway Distriparks and Allcargo Logistics showed a significant rise.

Timken stocks dropped by 0.49 percent at Rs.440.15 from their previous close of Rs.442.30 per equity share.

Concor’s stocks, also, dropped by 0.19 percent to Rs.1,133.25 from its previous close of Rs.1,135.40.

On the other hand, scrip of Gateway Distriparks gained by 2.74 percent to Rs.213.65 from previous close at Rs.207.95.

Scrip of Allcargo logistics showed a rise by 0.37 percent to Rs.148.30 from the previous day’s close at Rs.147.75.

Wagon manufacturer specific scrip — Kalindee Rail Nirman, Texmaco Rail and Engineering and Titagarh Wagons — all fell in the day’s trade, as compared to the previous day’s figures.

Scrip of Kalindee Rail Nirman (Engineers) declined by 1.68 percent at Rs.135, moving down from its previous close of Rs.137.30.

Texmaco Rail and Engineering fell by 1.80 percent to Rs.131.05 from its previous close of Rs.133.45.

Stocks of another wagon manufacturer, Titagarh Wagons declined by 2.60 percent to Rs.123.75 from its previous close of Rs.127.05.

Equity shares of other firms, such as Kernex Microsystems, MIC Electronics and KEC International, declined during the day’s trade.

Kernex Microsystems fell by 3.08 percent to Rs.37.80 from its previous day’s close at Rs.39.

Shares of MIC Electronics declined by 1.78 percent to Rs.19.35 from it’s previous day’s close at Rs.19.70.

Stocks of Transformers and Rectifiers (India) slipped by 3.88 percent to Rs.210.30 per equity share from the previous close of Rs.218.80.

Scrip of KEC International fell by 1.29 percent to Rs.103.10 from its previous close of Rs.104.45.

On the other hand, scrip of Hind Rectifiers gained by 3.41 percent to Rs.68.25 from the previous close of Rs.66.

Stone India’s stocks rose by 0.52 percent to Rs.67.95 over the previous close of Rs.67.60 per equity share.

Rail sector linked firms gain as CCEA clears 6 Rail projects worth Rs.10700 Crore

The cabinet committee on economic affairs approved the construction of six railway lines and a railway bridge. The proposals will cost over Rs.10,700 crore, according to a report, citing railway minister Suresh Prabhu.

New Delhi: Shares of railway sector-linked firms trade higher after media reports that cabinet committee on economic affairs approved construction of six railway lines and a railway bridge. The proposals will cost over Rs.10,700 crore, according to a report citing railway minister Suresh Prabhu.

Shares of Kalindee Rail surged 3.03% to close at Rs. 139.20 while shares of Titagarh Wagons gained 2% to close at Rs. 128.

Shares of Texmaco Rail and Engineering closed higher 1.35% at Rs. 135.15 and  Sanghvi Movers traded up 1.12% to end at Rs. 271.90.

Shares of Siemens and Alstom ended marginal high  0.37% and 0.02% at Rs. 1030 and Rs. 598 respectively.

However, BEML ended lower 1.79% at Rs. 939.55.

Kalindee Rail Nirman (Engineers) Ltd opened at Rs. 140 and touched a high and low of Rs. 142.7 and Rs. 135.1 respectively. A total of 362886(NSE+BSE) shares were traded on the counter. The current market cap of the company is Rs. 223.05 crore.

The BSE group ‘B’ stock of face value Rs. 10 touched a 52 week high of Rs. 172 on 23-Feb-2015 and a 52 week low of Rs. 98.9 on 25-Aug-2015. Last one week high and low of the scrip stood at Rs. 147.5 and Rs. 124 respectively.

The promoters holding in the company stood at 42.87 % while Institutions and Non-Institutions held 2.21 % and 54.93 % respectively.

The stock traded above its 50 DMA.

Titagarh Wagons Ltd opened at Rs. 128.4 and touched a high and low of Rs. 131.8 and Rs. 124.4 respectively. A total of 2680880(NSE+BSE) shares were traded on the counter. The current market cap of the company is Rs. 1448.07 crore.

The BSE group ‘B’ stock of face value Rs. 2 touched a 52 week high of Rs. 174.6 on 10-Mar-2015 and a 52 week low of Rs. 86 on 03-Jun-2015. Last one week high and low of the scrip stood at Rs. 137.9 and Rs. 108 respectively.

The promoters holding in the company stood at 46.11 % while Institutions and Non-Institutions held 29.38 % and 24.5 % respectively.

The stock traded above its 50 DMA.

Texmaco Rail & Engineering Ltd opened at Rs. 137 and touched a high and low of Rs. 138 and Rs. 132.15 respectively. A total of 360569(NSE+BSE) shares were traded on the counter. The current market cap of the company is Rs. 2804.13 crore.

The BSE group ‘B’ stock of face value Rs. 1 touched a 52 week high of Rs. 170.75 on 23-Feb-2015 and a 52 week low of Rs. 101 on 24-Aug-2015. Last one week high and low of the scrip stood at Rs. 142.35 and Rs. 121 respectively.

The promoters holding in the company stood at 54.81 % while Institutions and Non-Institutions held 33.94 % and 11.25 % respectively.

The stock traded above its 50 DMA.

Sanghvi Movers Ltd opened at Rs.275 and has touched a high and low of Rs.277.9 and Rs.270 respectively. So far 16345(NSE+BSE) shares were traded on the counter. The current market cap of the company is Rs. 1164.34 crore.

The BSE group ‘B’ stock of face value Rs. 2 has touched a 52 week high of Rs. 408 on 12-Aug-2015 and a 52 week low of Rs. 242.5 on 23-Feb-2015. Last one week high and low of the scrip stood at Rs. 312.5 and Rs. 262 respectively.

The promoters holding in the company stood at 46.88 % while Institutions and Non-Institutions held 28.85 % and 24.26 % respectively.

The stock is currently trading above its 50 DMA.

Siemens Ltd opened at Rs. 1044.8 and touched a high and low of Rs. 1044.8 and Rs. 1017.85 respectively. A total of 263314(NSE+BSE) shares were traded on the counter. The current market cap of the company is Rs. 36545.06 crore.

The BSE group ‘A’ stock of face value Rs. 2 touched a 52 week high of Rs. 1558 on 06-Aug-2015 and a 52 week low of Rs. 969 on 29-Jan-2016. Last one week high and low of the scrip stood at Rs. 1045.4 and Rs. 970 respectively.

The promoters holding in the company stood at 75 % while Institutions and Non-Institutions held 13.95 % and 11.05 % respectively.

The stock traded above its 200 DMA.

ALSTOM India Ltd opened at Rs. 605.4 and has touched a high and low of Rs. 609.8 and Rs. 590 respectively. So far 7234(NSE+BSE) shares were traded on the counter. The current market cap of the company is Rs. 4019.68 crore.

The BSE group ‘B’ stock of face value Rs. 10 has touched a 52 week high of Rs. 874 on 06-Aug-2015 and a 52 week low of Rs. 559.95 on 18-Jan-2016. Last one week high and low of the scrip stood at Rs. 634 and Rs. 572.2 respectively.

The promoters holding in the company stood at 68.56 % while Institutions and Non-Institutions held 17.22 % and 14.22 % respectively.

The stock is currently trading above its 200 DMA.

CONCOR continues to languish about 30% lower than its year’s high in July after outperforming at the beginning of 2015-16

Near-term headwinds will weigh on valuations as a pickup in exports would offer some respite, say Analysts

CONCOR ICD trafficNew Delhi: After closing at an annual low recently, the share price of Container Corp. of India Ltd (CONCOR) has recovered a bit. However, the stock continues to languish about 30% lower than its year’s high in July. That’s after considerably outperforming the benchmark Sensex at the beginning of 2015-16.

Firstly, the outlook on volumes is far from rosy. Jignesh Makwana, an analyst at Dolat Capital Market Pvt. Ltd, says the company had guided for 10% total volume growth initially for this year but had to tone it down to 7-8% later keeping the weak operating environment in mind.

“However, exim (export-import) volumes are likely to register 5% volume growth while domestic volumes are expected to decline by 12% leading to an overall growth of 2.5-3% for the full year,” says Makwana. CONCOR derives a major share of its revenues from its exim segment. For perspective, in the half year ended September, exim revenues accounted for 82% of total revenues while the remaining came from the domestic segment.

The slowdown in trade has been a problem for the exim business. A pickup in exports would offer some respite, say analysts. Meanwhile, competition from roadways is an issue for the domestic segment.

In the half year ended September, CONCOR’s operating profit margin stood at 20.6%. Revenues had increased 11% year-on-year while higher operating expenses, particularly, rail freight expenses, meant that operating profit declined 1%. For the June and September quarters, CONCOR’s volume performance was adversely affected due to the increase in haulage charges, one-off infrastructure-related issues and certain changes in the service tax mechanism.

Nevertheless, a robust balance sheet with little debt on the consolidated books works in favour of the company.

Moreover, from a long-term perspective, CONCOR is likely to be one of the biggest beneficiaries of the upcoming dedicated freight corridor, given its leadership position.

The corridor is expected to boost volumes. That hope is probably why the stock trades at about 26 times and 21 times its estimated earnings for this fiscal year and the next, which isn’t cheap.

Why Rail Stocks have Outperformed in past One Month

Rail StocksMumbai: Rail stocks have been in the limelight despite the subdued performance of the Indian stocks markets. Analysts say that higher government spending and a flurry of recent announcements by the Railways have lifted the sentiment in these stocks.

The shares of Titagarh Wagons, a supplier of wagons to the Railways, surged 44 per cent over the past one month. On the other hand, Sensex, the broad market indicator, lost around 1.8 per cent over the same period.

The shares of Kernex Microsystems, engaged in the manufacturing safety systems for the Railways, have gained over 30 per cent during the same time period. Other rail-related stocks Texmaco Limited and Kalindee Rail Nirman surged around 17-18 per cent in the past one month.

The Railways has an ambitious capital expenditure plan of Rs 1 lakh crore for the financial year 2015-16. This is 52 per cent more than the capex of the last fiscal (FY2014-15), says Bank of America Merrill Lynch.

However, so far this year the Railways has been behind in meeting the targeted capex as only 38 per cent of the planned capex for the year has been utilised so far, says Bank of America Merrill Lynch. Analysts expect the Railways to accelerate spending for the rest of the year.

JP Chaudhary, chairman of Titagarh Wagons, said a lot of activity has been happening in the sector. A tender of 15,000 wagons worth between Rs 4,000 crore and Rs 5,000 crore – the biggest in the past three years – has been issued recently, he added.

“The tender for Kanchrapara workshop which will manufacture new type of coaches has also been issued.”

Mr Chaudhary also referred to the agreement signed the Railways signed with GE and Alstom for two locomotive joint venture projects. India and Japan also recently signed an agreement for introduction of bullet train between Ahmedabad and Mumbai.

Analysts say, the Railways’ ambitious plan to redevelop 400 stations through a public-private partnership route is also expected to throw some good opportunities for the private sector companies.

Rail Stocks Gain after CCEA approves various Rail Projects

Rail Stocks and SharesNew Delhi: Indian railways rose after the Cabinet Committee on Economic Affairs ( CCEA) approved rail projects worth Rs.9598.32 crore.

CCEA, chaired by the PM Narendra Modi yesterday, Nov 18, 2015, has given its approval for revised cost estimate amounting to Rs.2774 cr with railway share as Rs.1247 cr and Ministry of Road Transport and Highways share as Rs.1527 cr for construction of rail-cum-road bridge across river Ganga (14 kms) at Munger with a provision that the cost of land for road approaches may increase in future as the State Government of Bihar has not yet initiated acquisition proceedings for the same.

The CCEA also gave its approval for 3rd and 4th lines between Budhapank and Salegaon via Rajathgarh railway line of 85 km each with a cost of Rs.1172.92 crore. The project is likely to be completed in the next three years during 12th and 13th Plan period.

The CCEA also gave its approval for doubling of Kottavalasa-Koraput railway line of 189.278 km with a completion cost of Rs.2977.64 cr.

Additionally, the CCEA gave its approval for doubling of Koraput-Singapur Road section railway line of 164.56 km with a completion cost of Rs.2361.74 cr.

The CCEA also gave its approval for doubling of Jagdalpur-Koraput section railway line of 110.22 km with a completion cost of Rs.1839.02 cr.

Among rail stocks, Hind Rectifiers (up 4.31%), NELCO (up 3.41%), Kalindee Rail Nirman (up 5.64%), Titagarh Wagons (up 6.05%), Stone India (up 3.83%), Texmaco Rail & Engineering (up 4.89%) gained.

Railway-related Stocks surge up to 6% on Fare Revision

New Delhi: Shares of companies linked to Indian Railways surged up to 6 per cent on Wednesday after the Cabinet approved railway projects worth Rs 7,500 crore in Odisha and Andhra Pradesh today.

The development saw scrips of Texmaco Rail Engineering, Titagarh Wagons, Kalindee Rail Nirman and Stone India surge as much as 6 per cent on the BSE. Titagarh Wagons gained 5.85 per cent, Texmaco Rail 5.37 per cent, Stone India 4.6 per cent, Kalindee Rail Nirman 5.2 per cent, Hind Rectifiers 2.36 per cent and Allcargo Logistics 2 per cent.

“The new rates are at par with platform ticket charges and will be effective from November 20. It aims to meet the objective of controlling rush at platforms for the convenience of passengers,” PTI quoted an official as saying.

The government also moved to hike base for non-suburban rail fare by Rs 5 to Rs 10. The move comes after it was noticed that passengers were increasingly avoiding the hike in platform ticket prices by buying second class train ticket for Rs 5, thus, depriving the railways of revenues. Railways had raised the prices of platform tickets from Rs 5 to Rs 10 from April this year.

Gateway Distriparks on the right track – The good prospects of the Company seem factored in its Stock Price

Stocks of Freight handling, Logistics & Storage service providers witness considerable investor interest

Gateway RailfreightMumbai: The logistics sector is perceived as an attractive play on planned infrastructure development in the country. Stocks of freight handling, logistics and storage service providers have seen considerable investor interest.

One of the beneficiaries is freight and logistics service provider Gateway Distriparks (GDL). The value unlocking from the listing of its subsidiary Snowman Logistics last September also helped. Besides, expectations that another subsidiary, Gateway Rail Freight, may be listed soon pushed up GDL’s stock price to a high of ₹442 in March 2015.

Though it has corrected since, GDL’s current stock price of ₹333 discounts the company’s 2014-15 consolidated earnings by nearly 20 times. Though cheaper than the 30 times commanded by state-owned Container Corporation, a larger peer, GDL trades higher than its own average earnings multiple of 10 times in the past three years.

The company’s revenue and profit have grown at an average annual rate of 11 per cent in the last three years — good but not spectacular. While some re-rating of logistics stocks may be justified given the ongoing infrastructure developments, which should aid freight volumes, , GDL’s valuation seems to be factoring in all the positives. Shareholders can remain invested as downside risks seem limited, but upside too may be capped due to the high valuation.

Long-term growth

GDL operates in three inter-linked segments — freight, rail and cold storage. It owns six container freight stations offering transportation, storage, warehousing and related services in the port cities of Navi Mumbai, Chennai, Visakhapatanam and Kochi. Freight is a high-margin segment with operating margin of about 40 per cent. Cargo volume grew 16 per cent in 2014-15 to 6.4 lakh twenty-foot equivalent (TEU) and should benefit from a few factors in the long term.

One, the 48 lakh TEU capacity additions at the Jawaharlal Nehru Port Terminal (to be completed in 2020) should increase freight activity. Two, the dedicated freight corridor (DFC) expected to be operational by 2019 will also aid volumes. Still, the company faces some concerns. One, rail-linked cargo volume growth may not improve in a hurry due to competition from the road segment. Two, its Chennai subsidiary’s operations were suspended by the Customs department in December 2014 due to unauthorised removal or attempted theft of a container. Volumes may be impacted until the unit becomes operational.

Listing trigger

The stock price may, however, get a near-term boost when subsidiary Gateway Rail Freight (GDL holds about 55 per cent stake in it) gets listed.

The subsidiary owns and operates a fleet of 21 trains, over 270 road trailers and three rail-linked inland container depots in North India and Navi Mumbai (installed capacity of 0.5 million TEU).

These depots, with direct connectivity to ports, such as Mundra and Pipavav, currently operate at 50 per cent capacity. A new facility in Ahmedabad is expected to be operational in a year. Additional capacity should boost revenue.

In the recent March quarter, profit in the rail operations segment nearly doubled year-on-year to ₹105 crore.

The management expects that while operating margin (28 per cent in 2014-15) could be maintained, volume growth seen in this segment last year may not be sustained in 2015-16 due to export growth worries; still, overall volumes may be aided by import growth.

GDL also operates cold storage warehouses through its listed associate company Snowman Logistics (40 per cent stake holding), which is expanding capacity aggressively.

Revenue from this segment increased 32 per cent in 2014-15, but margins dipped 160 basis points to 23 per cent, likely due to new capacities not yet fully ramping up. Snowman Logistics is signing up new customers — the recent one being Compass Group — to improve utilisation and stabilise margins.

Financials

GDL’s consolidated earnings in 2014-15 grew 38 per cent to ₹187 crore; revenue growth is not comparable year-on-year due to Snowman changing from a subsidiary to an associate company after September 2014. GDL’s balance sheet remains strong with net debt at 0.15 times equity.

China Railway Signal Seeks as Much as $1.8 Billion in IPO

China Railway Gp CoThe Beijing-based company, the world’s largest provider of train traffic-control systems, is selling 1.75 billion shares at HK$6.30 to HK$8 each, according to terms for the deal obtained by Bloomberg. Sixteen cornerstone investors, including China Railway Group Ltd. and Shanghai Zhenhua Heavy Industries Co., have agreed to buy more than half the offering.

China Railway Signal is seeking to become the first major new Hong Kong listing since a China stock rout wiped out $4 trillion in value and triggered unprecedented government intervention to support equities. The deal will add to the $18.5 billion raised by first-time share sales in the city this year, data compiled by Bloomberg show.

Beijing Infrastructure Investment Co. has agreed to buy $60 million of stock in the offering, while China Shipping Group Co. will invest $100 million and China Life Insurance Co. has committed $50 million, according to the terms. Cornerstone investors typically agree to hold on to their shares for at least six months in return for guaranteed allocation.

State-owned China Railway Signal plans to use about 20 percent of the proceeds to fund domestic and overseas acquisitions, the terms show.

Rival Expansion

Several other companies are eyeing Hong Kong listings as well. China International Capital Corp., Morgan Stanley’s former investment-banking partner in China, has filed pre-listing documents with the exchange to raise as much as $1 billion. Education International Cooperation Group Ltd., a Chinese provider of educational services backed by CVC Capital Partners, is planning an offering that could raise about $300 million late this year.

A number of other deals also are in the pipeline, at various stages of preparation.

China Railway Signal’s offering comes amid a major Chinese push for rail development. The government is seeking to use state-owned rail companies to win lucrative contracts and project political influence abroad, targeting markets including Africa, Latin America and Southeast Asia.

State-owned CSR Corp. and China CNR Corp. were combined in June to form CRRC Corp., a train equipment maker dwarfing Siemens AG and Alstom SA. The merger aimed to create economies of scale to help China compete more aggressively for overseas rail deals.

Other rail-signal makers have been expanding their market shares as well. Tokyo-based Hitachi Ltd. agreed in February to buy Finmeccanica SpA’s rail business and a signals affiliate, to narrow the gap with Germany’s Siemens and France’s Alstom.

In May, the Chinese government included rail as one of 10 focus industries in a blueprint to make China into one of the world’s most advanced industrialized economies.

China Railway Signal plans to price the offering July 31 and start trading Aug. 7, the terms show. Citigroup Inc., Morgan Stanley and UBS Group AG are joint sponsors of the listing, while Macquarie Group Ltd. is financial adviser.

EXIM volumes of CONCOR grew at a Compounded Annual Growth Rate of 7 per cent amid Economic Slowdown

Economic revival for CONCOR anticipated; limited upside for stock seen in short term

Mumbai: Ministry of Railways owned PSU – Container Corporation of India (CONCOR) has a strong balance sheet, near monopoly position, ongoing capex, and high barriers of entry. However, its current stock valuation appears to reflect the positive impact of a much-anticipated economic revival on its growth potential. It means there could be a limited upside to the stock price in the short term. In addition, future growth from the capacity expansion is still a few years away.

Over the last two years, CONCOR’s stock has grown more than 2.5 times. Between FY10 and FY14, export-import (EXIM) volumes grew at a compounded annual growth rate of 7 per cent amid economic slowdown. The volumes grew sharply by 11 per cent in FY15. However, given the slower pace of overall economic recovery, the management has guided for a moderate 10 per cent growth in FY16. CONCOR’s key growth driver will be the investments along the dedicated freight corridor (DFC). The company will be spending about Rs 1,500 crore over the next couple of years to set up logistic parks along the DFC. However, the benefit of these investments is long-term in nature as DFC is expected to be commissioned by 2018.

In March 2015, Indian railways raised haulage charges by 25-41 per cent for containers across various slabs. However, due to slow economic recovery, the company may not be able to pass on the entire cost to its customers at once. Besides, it may face competition from road transporters for shorter distances in case of a drastic hike.As a result, CONCOR’s operating margins may remain weak for this fiscal.

At Monday close of Rs 1,717, the stock is trading at a price-to-earnings ratio of 32.Given its strong balance sheet and nearly 80 per cent market share in rail freight segment, the company has commanded a premium valuation. But, a moderate EXIM volume growth may limit upside in the short-term. In addition to this, the government’s intention of divesting stake in the company may affect the stock price.

Gateway Distriparks rail business continue to grow at around 20%: Anand Rathi

Gateway DistriparksMumbai: The Research Report published by Anand Rathi Financial Services Ltd has recommended ‘Buy’ on Gateway Distriparks with target price of Rs 436 as against the current market price of Rs 352 with time horizon of 12 months.

Commenting on the investment rationale, the stock broker said, ”During the financial year FY15, GDL has reported a growth of 9.7% in its consolidated revenues at Rs 11,113 million as against Rs 10,128 million in FY14. Its growth was mainly led by Rail business which grew 21.3% while CFS business grew 13.2% for the year.The company’s EBITDA margins for the year stood at 29.4% at Rs 3267 million in FY15 as against Rs 2,571 million in FY14. The increase in profitability was due to both increase in throughput, cost savings due to operation of double stacking. On operational front, utilisations at its newer CFS facilities in Vizag & Kochi have picked up while its Faridabad ICD continues to struggle for sustainable pick up in volumes and may take few more quarters to stabilize.

As per the management, GDL plans to incur ~Rs 2,500 million capex to set up new facility at Varangaon, upgrade its existing Gujarat switching location to into ICD and utilize its land banks to further extend capacities. The company has also received private freight terminal approval for its Garhi & Sahnewal ICDs.

Going ahead, we expect GDL’s rail business to continue to grow at around 20% (+/- 3%) and CFS business at mid single digits for the short and medium term with an upside risk to growth with pick up in EXIM trade and economic recovery is faster and steeper. We initiate our coverage on Gateway Distriparks with a Buy rating and a target price of Rs 436 a share.”

Share capital cut at Central Provinces Railway Co.,

CPRC sharesMumbai: Central Provinces Railways Company has fixed Wednesday as ex-date for the proposed capital reduction.

Accordingly, investors in the company holding 100 equity shares of ₹10 each as on the record date (June 18), will receive six equity shares of ₹10 each post-capital reduction.

From ₹96.4 lakh, the company’s equity share capital will be reduced to ₹5.64 lakh.

LIC owns close to 15 per cent stake in the company, while retail investors hold 62.77 per cent stake.

Buy CONCOR; target of Rs.1950: says ICICIdirect.com research report

CONCORMumbai: ICICIdirect.com is bullish on Container Corporation of India and has recommended buy rating on the stock with a target price of Rs 1950, in its research report dated June 05, 2015.

CONCOR’s revenues grew ~16% YoY (up 3% QoQ) in Q4YF15 to Rs.1497.5 crore, mainly driven by Exim volumes that grew 5% YoY to 647425 TEUs. However, domestic volumes declined 19% YoY to 118045 TEUs. This decline was completely offset by a 17% increase in realisation on domestic route EBITDA for the quarter grew 20% YoY (down 13% QoQ) to Rs.318 crore. EBITDA margin for the quarter expanded 72 bps YoY (down 400 bps QoQ) to 21.3%. Margins remained sticky at ~21% on the back of an increase in haulage charges that resulted in an increase in terminal and other service charges PAT for Q4FY15 stood at Rs.293 crore, posting robust growth of nearly 19% YoY (down 3% QoQ).

“We believe the “Make in India” campaign would revitalise trade activities, which will rake in higher volumes for CONCOR. Further, revenues from PFTs and MMLPs would put Concor’s revenues on a strong footing. Regulatory changes like implementation of GST and DFC would back our growth estimates, for which we maintain our growth estimates and expect Exim and domestic volumes to post a CAGR of ~12% and 5%, respectively, over FY15-17E, thereby leading to revenue and earnings CAGR of 21% each during same period. Consequently, we assign a P/E multiple of 25x FY17E EPS of Rs.78 to arrive at a target price of Rs 1950. Though in the near term there could be volatility in the stock price, on the probability of 5% Government stake sale (currently at 61.8%), we recommend BUY on the stock”, says ICICIdirect.com research report.

(The views and investment tips expressed by investment experts/broking houses/rating agencies on RailNews are their own, and not that of the website or its management. RailNews advises users to check with certified experts before taking any investment decisions.)

Axis Rail India reports standalone Net Profit of Rs.0.27 Crore in Q4 2014-15

Sales reported at Rs 5.64 crore

Mumbai: Net profit of Axis Rail India reported to Rs 0.27 crore in the quarter ended March 2015. There were no net profit/loss reported during the previous quarter ended March 2014. Sales reported to Rs 5.64 crore in the quarter ended March 2015. There were no Sales reported during the previous quarter ended March 2014.

For the full year,net profit reported to Rs 2.42 crore in the year ended March 2015 as against net loss of Rs 0.06 crore during the previous year ended March 2014. Sales reported to Rs 104.75 crore in the year ended March 2015. There were no Sales reported during the previous year ended

Kalindee Rail Nirman board meeting on May 19, 2015

Kalindee Rail Nirman (Engineers) board meeting will be held on May 19, 2015, to consider the to receive, consider and approve the Audited Annual Accounts for the financial year ended March 31, 2015

Mumbai: alindee Rail Nirman (Engineers) Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on May 19, 2015, to consider the following:1. To receive, consider and approve the Audited Annual Accounts for the financial year ended March 31, 2015 including that of for three months period ended March 31, 2015.2. To approve appointment of Mr. Prakash Chandra Kejriwal as Chief Financial Officer of the Company in replacement to Mr.Vikas Jain who has since resigned.

Gateway Distriparks gains in pre-open trading on rail unit IPO plan

Mumbai: India’s Gateway Distriparks rallied and gained as much as 4.89 percent intraday, in pre-open trading after reports on Tuesday that the logistics firm is aiming to list its rail unit, valued by analysts at nearly $500 million, by the end of the current financial year in March 2016, two sources directly involved in the process said.

In order to maintain its majority stake after the IPO, Gateway Distriparks is in talks with Blackstone to buy back a five to seven percent stake in the unit, the sources added.  The stock closed at Rs 379.90, up 12.95 points or 3.53 per cent.

According to the report, private equity firm Blackstone, a key investor in unit Gateway Rail Freight, had written to the parent firm in January asking it to consider an initial public offer, according to a company filing at the time.

Blackstone invested around 3 billion rupees ($48 million) in Gateway Rail Freight in 2010, the bulk of that through convertible preference shares. If fully converted, Blackstone could hold a stake of over 40 percent, analysts estimate.

In order to maintain its majority stake after the IPO, Gateway Distriparks is in talks with Blackstone to buy back a five to seven percent stake in the unit, said the report quoting sources. They declined to be named as the talks are not public.

Titagarh Wagons to raise Rs 250 crore via equity placements

Kolkata (KOAA): Titagarh Wagons has decided to raise funds worth around Rs 250 crore though equity placements with qualified institutional investors. The company aims to submit the offer document with SEBI by early next month. Meanwhile, it has sought shareholders’ approval through a postal ballot for the fund-raising plan.

Further, the company has proposed sub-division of one share of Rs 10 each into 5 shares of Rs 2 each. Shareholders have been asked to send in their votes within April 11.

Titagarh Wagons is engaged in the business of manufacturing Railway Wagons, EMU (Rail Coaches), Bailey Bridges, Heavy Earth, Moving and Mining Equipment, Steel and SG iron castings of moderate to complex configuration etc.

Meanwhile, Titagarh Wagons Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 13, 2015, inter alia, to take on record the Audited Financial Results for the financial year ended March 31, 2015 and to consider recommendation of Dividend if any.

Central Provinces Railways Company: Outcome of Board Meeting

Mumbai: Central Provinces Railways Company Ltd has informed BSE that the Board of Directors of the Company at its meeting held on March 30, 2015, has approved the following matters:

  1. Resignation of M/s. D. S. Momaya & CO. from the post of the Secretarial Auditor of the Company.
  2. Appointment of M/s. H.V. GOR & CO as Secretarial Auditor of the company for the FY 2014-15.
  3. Appointment of M/s. Manoj Malu as Internal Auditor of the Company for the FY 2014-15.
  4. Appointment of Mrs. Rupali Kadam as woman director on the Board of Director of the Company.

Source : BSE

TD Power Systems stocks rallies on the Order win for supply of Traction Alternators to DLW/Varanasi

The stock rallied 10% to Rs 377 after the company received order from DLW to supply 10 traction alternators.

Dobbaspet (DBS), Bangalore Rural: TD Power Systems has rallied 10% to Rs 377 on the National Stock Exchange (NSE) after thecompany said that it has received order from Diesel Locomotive Works to supply 10 traction alternators.

Diesel Locomotive Works (DLW) is a production unit owned by Indian Railways and the largest diesel-electric locomotive manufacturer in India. These Traction alternators are mounted on EDM locomotives manufactured by DLW in India.

“The order is based on a provisional approval consequent to an RDSO capability audit of the Company. The Journey commenced in March 2013 culminating into this trial order,” TD Power Systems said in a press release.

After acceptance of the generators by DLW, the Company stands to be eligible for significant orders especially with the massive capex plan that the Indian Railways announced in the recent Union budget, it added.

The stock opened at Rs 369 and hit a high of Rs 382 on the NSE. A combined 147,445 shares changed hands on the counter till 0952 hours on the NSE and BSE.

Rail Stocks in focus; Titagarh Wagons hits 52-week high

Mumbai: Shares of rail related companies are trading higher on the bourses by up to 13% in otherwise in weak market on back of corporate announcements.

Titagarh Wagons (13% at Rs.828), Texmaco Rail & Engineering (6% at Rs.152), Stone India (5.5% at Rs.71), Kernex Microsystems (5% at Rs.44.45) and Kalindee Rail Nirman (3% at Rs.137) are up 3-12% on the BSE. The benchmark index, S&P BSE Sensex, was down 1.4% or 407 points at 29,043 at 1137 hours.

Among individual stocks, Titagarh Wagons has rallied 13% to Rs.828, extending its Thursday’s 22% surge in past four trading sessions on BSE. The stock opened at Rs.733 and touched a 52-week high of Rs 845 so far.

On March 4, 2015, Titagarh Wagons announced that its board approved sub-division of equity shares of Rs 10 each into equity shares of face value of Rs 2 each. A stock split, or sub-division of equity shares, is done to infuse liquidity and to make shares affordable for retail investors who could not invest earlier because of the high stock price.

The board has also approved in-principle, by passing an enabling resolution raising of funds through issuance of securities viz. equity or equity related instruments up to a maximum of Rs 250 crore subject to shareholders’ and other approvals, Titagarh Wagons said in a statement.

Kernex Microsystems is locked in upper circuit of 5% at Rs 44.45 after the company announced the proposal for sale/disposal of selected assets of the company to finance new projects and to provide additional capital to ongoing project. The board of directors of the company is schedule to meet tomorrow, March 10, 2015 to consider the same.

CONCOR rallies 9% after RBI nod for hike in FII Limit

Mumbai:  Container Corporation (ConCor) surged 9% to Rs.1,623 following Reserve Bank of India (RBI) approval for higher FII investment limit in the company. The counter has seen trades of around 22,000 shares so far on the BSE. According to a release issued by the RBI, the central bank last week notified that FII/NRI/FPI can invest up to 34 per cent of the paid up capital of Container Corporation of India. Meanwhile, the Sensex has tumbled 367 points to 29,082.

Titagarh Wagons to split its stock, making its shares more affordable to small investors

Kolkata (KOAA): Railway wagon maker Titagarh Wagons has decided to split its stock, making its shares more affordable to small investors.

The city-based company, in a filing with the Bombay Stock Exchange, today announced that its board of directors had “approved sub-division of equity shares of Rs 10 each into equity shares of face value of Rs 2 each, subject to the consent of the shareholders and alteration of memorandum & articles of association of the company to reflect the same as well as bring the said constitutional documents in line with the provisions of the Companies Act, 2013”.

Vice-chairman and managing director Umesh Chowdhary said the stock split was aimed at making the shares affordable to small investors and provide more liquidity in the market.

5bsustreThe company’s share price has significantly gone up from Rs 115.1 apiece on April 1, 2014, to Rs 706 at the end of today’s trade on the Bombay Stock Exchange. The scrip today closed with a gain of 5.02 per cent over the previous close.

The board has also given in-principle approval to raise Rs 250 crore through the issue of equity or equity-related instruments also subject to shareholder’s approval.

Chowdhary said the board’s decision was an enabling resolution to raise funds in the future.

He added that the railway budget presented last month had opened up significant opportunities for private players and the company might evaluate investment scopes.

The company is also looking to make a headway into the defence sector. At present, it has an order book of around Rs 150 crore.

Chowdhary said that group firm Cimmco could cater to the defence business in a bigger way in the future.

The company’s board has approved an employee stock option scheme to grant 1 lakh options (each option exercisable into one equity share) to eligible employees at Rs 221 per share.

IL&FS Transportation up 4% on rail over bridges order

Mumbai: IL&FS Transportation Networks shares jumped 4 percent intraday on Tuesday on getting letter of award for development of 8 rail overbridges in Gujarat. “The roads & building department, Government of Gujarat has issued a letter of award for development of 8 railway over bridges (ROBs) in Gujarat under PPP mode on annuity basis,” said the company in its filing to the exchange. The development of the project will be undertaken through a subsidiary of the company, it added. The project has a concession period of 17.5 years (including construction period of 2.5 years) at a total project cost of Rs 250.85 crore. The semi-annual annuity payable will be Rs 21.99 crore for a period of 15 years, said the company. At 12:48 hours IST, the scrip of IL&FS Transportation Networks was quoting at Rs.223.20, up Rs.5.50, or 2.53 percent on the BSE.

Rail infra focus leaves some stocks in a sweet spot

Mumbai: The rail budget generated mixed reaction from the stock market, with stocks of railway-linked companies and service providers benefitting from a 52 per cent higher plan outlay, which has risen to Rs 1 lakh crore for this financial year.

The freight rate hike has had a negative im­pact on producers as well as consumers of commodities such as coal, steel, cement, urea and foodgrain.

“The 52 per cent hike in plan allocation for railways should result in more order flow for companies in the rail infrastructure space, ranging from manufacturers of rails, signaling, wagons and rolling stock, among others,” said R Sreesankar, head of insitutional equities at Prabhudas Lilladher.

“We also understand from channel checks that orders for wagons budgeted for FY2015 are yet to be released and it can turn out to be a better year for the wagon manufacturers as FY2016 has seen a 60 per cent higher allocation than in FY2015 for investment in wagons,” Sreesankar said.

Vinod Nair, head of fundamental research at Geojit BNP Paribas, in a report said the increase in annual freight capacity to 1.5 billion tonnes from 1.05 billion tones augurs well for the logistics service providers. The railway minister also said that Indian Railways would partner with PSUs to ensure critical commodities like coal are transported on a priority basis.

“The announcement is positive for Gati, Container Corporation and Gateway Distriparks on account of higher freight capacity,” the Geojit BNP Paribas analyst said.

In the railway EPC space, the proposal to increase track capacity by 10 per cent to 1.38 lakh km and construct road over bridges (ROB) for unmanned level crossings is a positive for Kalindee Rail Nirman.

The budget sanctioned 6,608 km electrification in FY16, which is a positive for Simplex, Transformers and Rectifiers India and Hind Rectifiers.

The proposal for additional wagons and coaches would be positive for Titagarh Wagons, Texmaco Rail and BEML. The railway minister also announced 1000 mw solar power projects on railway land or rooftops, which will be a positive for solar power developers like Indosolar and others.

“The 10 per cent freight hike for fertiliser will be neutral for companies like RCF, GSFC, Madras Fertilizers, as freight cost will be borne by the government,” Geojit BNP Paribas said.

The 2.7 per cent freight hike for cement will be marginally negative for the sector but the higher freight rates for coal, iron and steel, cement and fertiliser will have mixed and varied response from the companies.

The freight rate for coal, which was hiked by 6.3 per cent from Rs 723 per tonne to Rs 767, will be negative for merchant power companies such as Adani Power and Jindal Steel and Power (JSPL), as the rise in cost will impact margins.

However, it will be neutral for Coal India, as it passes on a major chunk of the freight cost to the consumer.

The freight rate on domestic iron ore has gone up by 0.8 per cent from Rs 1,379 per tonne to Rs 1,390, but it will be neutral for the steel companies as the rate hike is not material.

Emkay Global Financial Services analysts Dhananjay Sinha, Nitin Arora and Kushan Parikh said, “For cement, the 2.7 per cent freight increase will lead to average price increase by Rs 8 a tonne while the 6.3 per cent increase in coal freight will lead to an average increase of Rs 5 per tonne in operating cost of the industry. This is not very significant and a price increase of Rs 16 per tonne (Rs 0.8/bag) can neutralise this impact.”

The ‘swachh railway’ mission, bio-toilet scheme and waste-to-energy conversion plants would be positive for A2Z Infra, Sintex Industries, VA Tech Wabag. The thrust on rail safety and introduction of surveillance camera will be positive for Zicom, Nelco, as they focus on integrated security and surveillance. More focus on the signaling systems for safety measures will be a positive for Kernex Micro and Kalindee Rail.

The steps towards modernisation by introducing automatic ticket vending machines and smart cards are positive for CMC, which is engaged in high-speed reservation, ticketing and distribution services. Air-conditioned local trains in Mumbai will be positive for Hitachi, Voltas and Blue Star.

Angel Broking in a report on the rail budget said, “Track doubling/tripling/quadrupling works along with electrification of 9,400 km, covering almost all states at a cost of Rs 96,182 crore, which is over 2,700 per cent higher in terms of amount sanctioned, will be positive for BEML, Texmaco, Titagarh Wagon, Kernex Microsystem and Kalindee Rail.”

Railway stocks rebound on Rail Budget announcement

Titagarh Wagons was locked at the 10% upper circuit at Rs. 640. The stock has zoomed by 78 per cent so far this month

Mumbai: Railway related stocks bounced back following yesterday’s severe drubbing after the announcement of Rail Budget. Titagarh Wagons was locked at the 10% upper circuit at Rs. 640. The stock has zoomed by 78 per cent so far this month.
Texmaco Rail soared 10.5% to Rs. 150. Stone India has gained 3.5 per cent at Rs. 82.50.Kalindee Rail Nirman advanced 2.6 per cent to Rs. 139 and Container Corporation of India added 2 per cent to Rs. 1,550.

– See more at: http://www.indiainfoline.com/article/news-top-story/railway-stocks-rebound-on-rail-budget-announcement-115022701001_1.html#sthash.8LQEfKUb.dpuf

Railways to remain ‘Vibrant Lifeline’ for National Growth: says Dolat Capital

मुंबई Mumbai: Dolat Capital interacted with Arunendra Kumar, Ex Chairman Railway Board. It Indicates, major capex plans for Railways over medium term. “Railways: New Lifeline for Growth!”, says the report.

FDI is now allowed in 10 sectors in railways. Railways had an expenditure target of Rs.60,000 Crore in the current financial year. The sourcing is as follows:

  • Budget allocation: Rs 30,000 Crore
  • Loans: Rs 15,000 Crore
  • Railways internal resources: Rs 15,000 Crore
  • PPP: Rs 5,000 Crore (so far, this has not taken off as per the expectations of the government).

Given the projects that are under execution, the department has a capability of undertaking an annual expenditure of Rs 1,10,000 Crore. However, due to paucity of funds, it’s expenditure is restricted to Rs 60,000 Crore. The government is aware of this scenario and hence is encouraging private sector for incremental investments through PPP route.

The terms and conditions of the contract are more private-sector friendly. Earlier, railway contracts were more hegemonic in nature, leaving no bargain for the private sector. Now realising the importance of private investments, the railways have become more equitable in their dealings with the private sector.

PPP model in railways can be designed by varying one of the four key components; Land, Laying, Ownership and freight rebate.

The Central Government is also working on a State-wise SPV model. Herein, the GOI and state jointly undertake the project, both in terms of capital investment and execution.

Railways have projects that have long gestation period over 7 years. This restricts railways’ ability to raise debt from market, as servicing could become an issue in the interim.

There are two locomotive factories (assembling units) planned under PPP route. These would have a total outlay of Rs.3,000 Crore. The unique features of these projects are:

These would be largely assembling units and would undertake assembling, painting and testing related works.

Guaranteed orders worth Rs.30,000 Crore (a diesel locomotive is worth Rs 16.5 Crore and electric locomotive slightly higher).

The orders would include 800 units of electric locomotive and 1000 units of diesel electric locomotive.

The contract has rigid timelines, performance on fuel consumption and investment timeline clauses. Any deviation from the clauses would invite penalties

Land has already been purchased by the GOI and once bidding process is over, would be leased to the successful bidders.

Technical bids are cleared. For electric locomotive assembly plant Seimens, Alstom and GE have qualified. For Diesel locomotive assembly plant, GE and EMD (now Caterpillar) have qualified.

RFPS for financial bids are yet to be issued. The current government is concerned about the “guaranteed order” clause of the contracts. While it was well discussed by the previous government, the current regime is taking a fresh look at this. This is holding back issuance of RFP for financial bids.

While executing a railway project, alignment (identifying the route and achieving requisite clearances) is most time consuming. Typically, if alignment has been achieved and there is no tunnel/brigde/hilly terrain, 50km of railway line can be laid in a year.

There have been more proposals of port connectivity, incrementally.

DFC: Total cost of above 3400km estimated or Rs 810bn. The estimated completion for the project is between March 2018 to December 2019. It will lead to faster movement of freight traffic between West to North & North to East routes.

Wagons availability is not an issue considering the huge capacity both captive and private. The lead time required is also lower or 6-8 months vs other activities which require longer lead time.

To Download Report, Click HereRailways The Lifeline of Nation Economy post Rail Budget 2015- Dolat Capital

Rail stocks drop on profit booking ahead of Rail Budget-2015

मुंबई Mumbai: Shares of nine companies whose fortunes are linked to orders from Indian railways fell by 0.78% to 16.01% at 10:45 IST on BSE on profit booking ahead of Railway Budget 2015-16 on Thursday, 26 February 2015.  The Railway Budget 2015-16 will be tabled in the parliament by the rail minister Suresh Prabhu on Thursday, 26 February 2015. This will be the first full railway budget of the Narendra Modi government and hopes are already running high that the document will contain innovative and out-of-the-box plans to turnaround railways and modernise the network and its supporting infrastructure.

Meanwhile, the S&P BSE Sensex was up 25.34 points or 0.09% at 29,000.45.

Among railway stocks, Hind Rectifiers (down 8.45%), NELCO (down 1.01%), Kalindee Rail Nirman (down 16.01%), Titagarh Wagons (down 9.99%), Stone India (down 9.74%), Texmaco Rail & Engineering (down 15.45%), Kernex Microsystems (down 4.95%), and BEML (down 0.78%) declined. Zicom Electronic Security Systems rose 0.17%.

Container Corporation of India dropped 4.36% as the stock turned ex-dividend today, 24 February 2015, for an interim dividend of Rs 8 per share for the year ending March 2015.

Most of these rail stocks had rallied in past one week. The Railway Budget 2015-16 will be tabled in the parliament by the rail minister Suresh Prabhu on Thursday, 26 February 2015. This will be the first full railway budget of the Narendra Modi government and hopes are already running high that the document will contain innovative and out-of-the-box plans to turnaround railways and modernise the network and its supporting infrastructure.

The Rail Budget will mainly look at issues such as dynamic revenue earning model, freight and fare rationalisation, and capacity augmentation, report said. Although, the Rail Ministry has several plans for the fiscal year 2015-2016 to improvise the condition of Railways, there seem to be no relief for the passengers this year. Prabhu had some time back said that reduction in passenger fares is unlikely to happen although diesel prices have come down. The budget is expected to be inspired by Narendra Modi’s Swachh Bharat Mission, Make in India initiative and hi-end technology.

With ‘Swachh Bharat’ expected to be the keyword in the Railway Budget, Prabhu may announce major steps to improve cleaning efforts comprising installation of bio-toilets in trains and stations, provisioning dustbins across all types of coaches. Introduction of Wi-Fi services on station premises might be introduced as another major highlight of the budget this year. The Railway Budget might explore the possibilities of Information Technology (IT) to enhance the security of railway passengers and to curb growing incidents of crimes against women commuters. The North-East is also expected to get priority in the upcoming budget as an announcement for introduction of local services to improve connectivity in the region is on the anvil. Proposals for innovative funding for infrastructure projects are also on the anvil. The cash-strapped Railways has a challenge of completing more than 300 pending projects requiring an investment of around 1.7 lakh crore. Prime Minister Narendra Modi’s ambitious plan of Diamond Quadrilateral – connecting metros with high speed trains – would also be tabled at the Rail Budget session. To run semi-high speed trains on several corridors, the budget is likely to propose indigenously built coaches or trains that can run upto 200 km per hour speed. All the proposals are expected to be in tune with government’s ‘Make in India’ initiative, report added.

The government had last year, notified the liberalised foreign direct investment (FDI) norms for rail infrastructure, allowing 100% FDI through automatic route in the sector. FDI beyond 49% in sensitive areas will require Cabinet approval on a case-to-case basis.

A rangebound movement was witnessed as key benchmark indices hovered near the flat line in early afternoon trade. The barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty were currently trading slightly higher for the day. The market breadth indicating the overall health of the market was weak. The Sensex was currently trading above the psychological 29,000 mark, having alternately moved above and below that level in intraday trade so far. The Sensex had fallen below the psychological 29,000 mark after yesterday’s slide. The Sensex was currently up 30.84 points or 0.11% at 29,005.95. The BSE Small-Cap and Mid-Cap indices, both, hovered in red.

Meanwhile, the government reportedly tabled the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Amendment) Bill, 2015. Opposition parties remained adamant on their stance over the land acquisition bill and created a ruckus in Parliament even as the government said it is well within its right to issue ordinances.

Telecom stocks declined. Shares of companies whose fortunes are linked to orders from Indian railways edged lower.

Foreign portfolio investors (FPIs) bought shares worth a net Rs 601.91 crore yesterday, 23 February 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) sold shares worth a net Rs 163.79 crore yesterday, 23 February 2015, as per provisional data.

The market may remain volatile this week as traders roll over positions in the futures & options (F&O) segment from the near month February 2015 series to March 2015 series. The near month February 2015 derivatives contracts expire on Thursday, 26 February 2015.

In the foreign exchange market, the rupee edged higher against the dollar.

Brent crude oil futures edged lower in choppy trade.

In overseas markets, Asian stocks edged higher before US Federal Reserve Chair Janet Yellen’s semi-annual monetary policy testimony to the Congress later in the global day. Most US stocks edged lower in choppy trading session yesterday, 23 February 2015.

At 12:19 IST, the S&P BSE Sensex was up 30.84 points or 0.11% at 29,005.95. The index fell 57.48 points at the day’s low of 28,917.63 in mid-morning trade. The index gained 79.71 points at the day’s high of 29,054.82 in early trade.

The CNX Nifty was up 9.90 points or 0.11% at 8,764.85. The index hit a low of 8,736.90 in intraday trade. The index hit a high of 8,777.40 in intraday trade.

The market breadth indicating the overall health of the market was weak. On BSE, shares 1,533 declined and 985 shares gained. A total of 93 shares were unchanged.

The BSE Mid-Cap index was off 20.20 points or 0.19% at 10,725.22. The BSE Small-Cap index was off 65.79 points or 0.58% at 11,323.69. Both these indices underperformed the Sensex.

The total turnover on BSE amounted to Rs 1665 crore by 12:25 IST compared to turnover of Rs 1360 crore by 11:15 IST.

Telecom stocks declined. Reliance Communications (down 1.49%), Idea Cellular (down 1.81%), Mahanagar Telephone Nigam (down 1.86%), Bharti Airtel (down 0.69%) and Tata Teleservices (Maharashtra) (down 1.01%) edged lower.

Telecom Regulatory Authority of India (TRAI) in a notification yesterday, 23 February 2015, slashed domestic and international termination call charges. Mobile termination charge (MTC) for all calls originating from wireless network has been reduced from 20 paise per minute to 14 paise per minute. Further, to promote investment and adoption of wireline network (so that they become an effective vehicle for delivery of high speed internet in the country), TRAI has decided to prescribe fixed termination charges (FTC) as well as MTC for wireline to wireless calls as zero. Termination charge for international incoming calls has been increased to 53 paisa per minute from existing 40 paisa per minute.

Container Corporation of India dropped 5.16% to Rs 1,514.50. The stock turned ex-dividend today, 24 February 2015, for an interim dividend of Rs 8 per share for the year ending March 2015.

In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 62.2825, compared with its close of 62.3125 during the previous trading session.

Brent crude oil futures edged lower in choppy trade. Brent for April settlement was off 40 cents at $58.50 a barrel. The contract had dropped $1.32 a barrel to settle at $58.90 a barrel during the previous trading session.

Meanwhile, the government reportedly tabled the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Amendment) Bill, 2015. Opposition parties remained adamant on their stance over the land acquisition bill and created a ruckus in Parliament even as the government said it is well within its right to issue ordinances. The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Amendment) Bill, 2015 will replace the ordinance promulgated by the government in December last year, which had brought changes in the earlier bill passed in 2013 by the UPA government.

Meanwhile, the stock exchanges have decided to keep the stock market open on Saturday, 28 February 2015, just like any other normal trading session when the Finance Minister Arun Jaitley presents the first full-fledged Budget of the Narendra Modi government. Trading will start at 9:15 IST and conclude at 15:30 IST. Jaitley will begin his speech at 11:00 IST in Lok Sabha on 28 February 2015 as he tables the Union Budget 2015-16 in the parliament.

The Railway Budget 2015-16 will be tabled in the parliament by rail minister Suresh Prabhu on Thursday, 26 February 2015. The Economic Survey will be tabled on Friday, 27 February 2015.

The next major event for the financial markets is Union Budget for 2015-16. Finance Minister Arun Jaitley will present Union Budget 2015-16 in Parliament on Saturday, 28 February 2015. Analysts will scrutinize measures in the Budget for financing infrastructure projects as well as the government’s own capital expenditure on infrastructure for the year ahead. This is the first full fledged Budget of the Narendra Modi government and analysts will look for a roadmap for economic growth for the next few years.

Changes in rates of dividend distribution tax, capital gains tax on sale of shares, Securities Transaction Tax (STT) and Minimum Alternate Tax (MAT), if any, will be closely watched. The dividend distribution tax is currently at 15%. The minimum alternate tax is currently at 18.5% of book profits. Short term capital gains tax on sale of shares is currently at 15% while there is zero long capital gains tax on sale of shares held for a period of more than one year.

Analysts are awaiting further progress on the Goods and Services Tax (GST) during the ongoing Budget session of Parliament after the Constitution Amendment Bill for the introduction of GST was tabled in the Lok Sabha during the winter session of parliament. GST, touted as the single biggest indirect taxation reforms since independence, will simplify and harmonise the indirect tax regime in the country. Central taxes like Central Excise Duty, Additional Excise Duties, Service Tax, Additional Customs Duty (CVD) and Special Additional Duty of Customs (SAD), etc. will be subsumed in GST. At the state level, taxes like VAT/Sales Tax, Central Sales Tax, Entertainment Tax, Octroi and Entry Tax, Purchase Tax and Luxury Tax, etc. would be subsumed in GST.

Asian stocks edged higher today, 24 February 2015 before the US Federal Reserve Chair Janet Yellen speaks to lawmakers. Key benchmark indices in Singapore, Taiwan, Japan, Indonesia and South Korea rose by 0.24% to 1.05%. In Hong Kong, the Hang Seng index fell by 0.45%. China’s mainland markets remain closed today, 24 February 2015 for the Lunar New Year holiday.

Markit Economics will tomorrow, 25 February 2015, announce preliminary reading of China’s HSBC PMI index for February 2015, indicating health of China’s manufacturing activity for that month.

Trading in US index futures indicated that the Dow could rise 11 points at the opening bell today, 24 February 2015. US stocks ended mixed yesterday, 23 February 2015 as lower oil prices dragged down energy shares. In economic data, sales of previously owned US homes fell in January as a tight supply forced up prices, showing the residential real-estate market faces an uneven recovery. Purchases slowed 4.9% to a 4.82 million annualized rate, the least since April, according to figures from the National Association of Realtors yesterday, 23 February 2015.

Investors will receive further clues on the central bank’s assessment of the economy and the timing of a rate increase when Federal Reserve Chair Janet Yellen gives two days of testimony to Congressional finance committees starting today, 24 February 2015.

Meanwhile, Greece yesterday, 23 February 2015, finalised measures which include plans to combat tax evasion and tackling fuel and tobacco smuggling in order to secure a bailout extension. Greece had previously delayed presenting the reforms by 24 hours. Euro zone finance ministers would today, 24 February 2015, discuss Greece’s plans as scheduled earlier.

Markets expected to remain volatile over the next few days ahead of Rail Budget

मुंबई Mumbai: Ahead of Railway Budget over the upcoming weekend, the market is expected to remain volatile over the next few days. At the moment, the market is at the upper end of the trading range, he says. As expected, there will be a lot of noise in the run up to the Budget. But Dutt does not expect major changes on the tax front in the Budget. The Budget needs to be a radical, out-of-the-box type of a Budget. If it indeed turns out to be a Modi Budget, or if finance minister Arun Jaitley truly manages to deliver, there will be a big rally in the market. As far as the Railway Budget goes, all positives that may come from it are already priced in. Certain core issues have been plaguing the Railways for many years now and if Suresh Prabhu has to bring the railways back on track, there is a need for some radical decisions on that front as well. Coming back to the markets, despite most investors increasing their IT play, IT is a crowded trade right now. Investors move money from the IT sector to some of the riskier assets and to buy banks on every dip. Indications are that the Nifty hitting 9500-9800 in the next 12 months.

It is bit too late to invest in Railway-linked stocks: Anand Tandon

Mumbai: In a chat, Anand Tandon, Independent Analyst, shares his views on Railway Budget. Excerpts:

Do you play into defence or Railway-linked stocks?

Anand Tandon: I have been proponents of those two sectors for a while now. We have seen many companies over the last few days rally almost 30-40% after already having established a fairly strong run over the last few months. So, I am not sure that from a valuation perspective, any of these businesses are now looking like being very attractive.

That said, if you are really a long-term investor, then these businesses will eventually catch up because the numbers can be very dramatic. You look at $30-40 billion of defence expenditure that is budgeted for every year and even if you assume that over a period of next 10 years, let us say half of it were to move to India, you are looking at $20 billion move every year from then on.

So, it is very large industry that will get created and this is a thing that should have been done much earlier. Railways is certainly an area where it is lot more difficult to play given the fact that there are only a few levers that the government can press in terms of infrastructure and so on and here again we find that most of the companies whether they are container companies or wagon manufacturers have already done very well.

Some of the other equipment manufacturers are actually  going to go to private foreign companies. Even though they may be made in India but they are not going to be made for the Indian investor.

Right now if you are trying to play for the budget, it is a bit too late and the best way would be to actually move out of the way because the best expectations you can get have probably been priced in, maybe you will get another 5% up as far as the budget sectors are concerned.

More disappointment is likely because at the end of the day, not everything that you wish for can be given to you and therefore some of these sectors may see significant cooling off post budget statement.

While you broadly touched upon the railway budget but the rally that we saw in Titagarh Wagons yesterday was a bit of a sentiment rub off across some of these railway related stories, what do you think the market is expecting from the budget because even when you talk to investors they are really looking for an investment opportunity in the space?

Anand Tandon: The wagon orders that have come out from railways for the last two years have been more or less non-exciting. The expectation is that you will get back to a certain size of orders over the next couple of years and you have reason to believe that with the good minister handling railways who has a good track record in earlier government and the fact these prime minister has gone on record to say that he expects to see the railways as a driver of GDP growth, you would expect that there will be significant investment coming through.

So, it is not surprising that some of the companies which are directly or indirectly related to railways are doing well. Container Corp has been doing quite well over the last few days. Therefore, the valuations at some time have to catch up.

 

Gateway Distriparks gets Blackstone notice to initiate steps for Gateway Rail IPO

Gateway Distriparks to list its subsidiary Gateway Rail Freight. The notice to exchanges by Gateway Distriparks did not disclose details of the equity stake by Blackstone or timeline for the IPO

GatewayRailमुंबई Mumbai: Port-based logistics company Gateway Distriparks Ltd will sell shares of its subsidiary company Gateway Rail Freight Ltd through an initial public offer (IPO). In its filing to BSE, Gateway Distriparks said in response to a notice received from private equity firm Blackstone GPV Capital Partners’ letter dated 16 January that the company has decided to initiate steps necessary for the IPO of Gateway Rail Freight.

Gateway Distriparks Ltd has announced that the Board of Directors of the Company at its meeting held on January 29, 2015, in response to the notice received from Blackstone GPV Capital Partners (Investor) vide their letter dated Jan 16, 2015, have decided to initiate steps necessary for the IPO of the Company’s subsidiary Company, Gateway Rail Freight Limited, in accordance with the terms of the Share Subscription & Shareholders Agreement (SSHA) dated Nov 09, 2009 and applicable rules & regulations.

In November 2009, New York-based Blackstone Group Lp had invested Rs.300 crore in Gateway Rail Freight. Blackstone had said it will acquire between 37.27% and 49.90% of Gateway Rail in preferential shares based on certain performance parameters. Gateway Distriparks could buy back the shares at the end of five years from the date of investment or Blackstone could sell it back to Gateway Distriparks at the end of 10 years. The notice to exchanges by Gateway Distriparks did not disclose details of the equity stake by Blackstone or timeline for the IPO. Gateway Rail handles all the rail operations of the parent group. It provides inter-modal logistics and operates its own rail-linked inland container depots at Garhi-Harsaru (Haryana), Ludhiana (Punjab) and Kalamboli (Navi Mumbai). Gateway Rail owns and operates a fleet of 21 trains and 235 plus road trailers at its rail-linked terminals, according to the Spokesperson.  In August last year, Snowman Logistics Ltd, a cold chain transportation company promoted by Gateway Distriparks, raised Rs.197 crore from the sale of 42 million equity shares in an IPO, which was subscribed 60 times.

Rail Stocks in demand after Railway Minister’s announcement on Investment

मुंबई Mumbai: Shares of eight companies whose fortunes are linked to orders from Indian Railways rose by 0.13% to 2.69% at 15:21 IST after Railway Minister said that Indian Railways needs investment from all possible sources for speedy development of infrastructure.

Meanwhile, the BSE Sensex was up 500.57 points, or 1.77%, to 28,762.58

Texmaco Rail and Engineering (up 1.37%), Kalindee Rail Nirman (Engineers) (up 0.57%), Nelco (up 0.13%), Bharat Heavy Electricals (up 0.18%), Titagarh Wagons (up 0.99%), Zicom Electronic Security Systems (up 2.69%), Stone India (up 2.91%) and Container Corporation of India (up 0.71%) edged higher. BEML (down 1.86%), Kerrnex Microsystems (India) (down 1.99%), Hind Rectifiers (down 1.8%) and Transformers & Rectifiers (India) (down 0.7%) declined.

Minister of Railways Suresh Prabhu said on 19 January 2015 that Indian Railways needs investment from all possible sources for speedy development of the railway infrastructure. Towards this, Indian Railways is exploring to draw investments from new sources such as foreign pension funds and other institutions, Prabhu said at a Seminar on PPP and FDI in Indian Railways organized by the Centre for Transportation Research and Management (CTRAM) in Secunderabad. In his speech at the seminar, D.P. Pande, Member/Traffic, Railway Board and President, CTRAM, stated that Indian Railways is at the crossroads, unable to meet the present demands due to resource crunch. He said that a staggering amount of Rs 1.18 lakh crore is needed for the completion of 359 major sanctioned railway projects. The need of the hour is for a fresh outlook and innovative thinking to generate required resources, he added.

Blackstone seeks IPO for portfolio firm Gateway Rail Freight

This could be first IPO-led exit activity for the PE firm in India

Gateway Distriparksमुंबई Mumbai: Private equity firm Blackstone has sought a public listing of Gateway Rail Freight Ltd (GRFL), which could open the window for an exit from its over five-year-old investment in the subsidiary of Gateway Distriparks Ltd (GDL), as per a stock market disclosure.

Blackstone has written to Gateway Distriparks seeking an IPO of GRFL in accordance with the terms of the share subscription & shareholders agreement dated November 9, 2009, Gateway Distriparks said in the filing.  An email query sent to Prem Kishan Gupta, Deputy Chairman & MD and R Kumar, deputy CEO & CFO of Gateway Distriparks, for more information, did not elicit any response till the time of filing this article.

Responding to a separate email query to the spokesperson of Blackstone on whether it wants to fully or partly exit its investment, the firm said it did not wish to comment on the development.

Blackstone had invested close to Rs 300 crore in New Delhi-based Gateway Rail Freight Ltd back in 2010. Bulk of this is through 120 million Compulsory Convertible Preference Shares (CCPS) of Rs 24.65 each. These CCPS can be converted into equity at the ratio of 167 shares for every 100 CCPS.

On conversion, Blackstone could hold around 40 per cent stake, after factoring in conversion of preference shares by Gateway Distriparks in the subsidiary.

Gateway Rail Freight provides intermodal logistics and operates its own Inland Container Depots/Dry Ports. It operates rail linked facilities at Garhi-Harsaru (Gurgaon, Haryana), Ludhiana (Punjab), Asaoti (Faridabad, Haryana) and Kalamboli (Navi Mumbai).

The company owns and operates a fleet of 21 trains and 230+ road trailers at its rail linked terminals. Gateway Rail operates regular container train service from these ICDs/Dry Ports to the maritime ports at Nhava Sheva, Mundra and Pipavav, transporting import and export as well as domestic containers.

For the year ended March 31, 2014, it had turnover of Rs 573 crore with net profit of Rs 52.1 crore.

For Gateway Distriparks this could mean another of its subsidiaries going public. Recently Snowman Logistics Ltd, an integrated temperature controlled logistics services unit of the firm, got listed. The firm, which counts Norwest Venture Partners and IFC as investors had a blockbuster listing in September, after its IPO was over-subscribed nearly 60 times.

Shares of GDL last traded at Rs 382.85 each, up 4.9 per cent on BSE in a strong Mumbai market on Monday.

For Blackstone, which also separately owns over 14 per cent stake in Allcargo Logistics, this could mark the first IPO-led exit opportunity in India. Another portfolio firm Emcure Pharma had filed for its IPO a couple of years ago but later decided not to go ahead with it. Blackstone eventually exited through a secondary PE deal where it sold its stake to Bain Capital.

Gateway Distriparks hits new high on hopes of Gateway Rail Freight IPO

Gateway Distriparks stocks has surged 10% to Rs 400 on the National Stock Exchange

Gateway Distriparksमुंबई Mumbai: Gateway Distriparks has surged 10% to Rs 400 on National Stock Exchange (NSE) after Blackstone GPV Capital Partners requested the company to effect initial public offer (IPO) of Gateway Rail Freight Limited.

“Blackstone GPV Capital Partners (Investor) have sent a letter dated January 16, 2015 to the company and the company’s subsidiary company – Gateway Rail Freight Limited (GRFL) requesting the company to effect an IPO of GRFL in accordance with the terms of the Share Subscription & Shareholders Agreement (SSHA) dated November 09, 2009,” Gateway Distriparks said in a BSE filing.

The company will respond to the request from the investor in due course. This will have no impact on the operations or profitability of the company, it added.

In November 2009, Blackstone Group announced the acquisition of a 37.5% stake for Rs 300 crore in Gateway Rail Freight.

The stock opened at Rs 369 and touched a record high of Rs 407 on NSE. The counter has seen huge trading volumes with a combined 648,450 shares changed hands till 1010 hours on NSE and BSE.

Prefer CONCOR in Logistics Space from medium to long term perspective: Kunj Bansal

In a chat, Mr.Kunj Bansal, ED & CIO, Centrum Wealth Management, shares his views on logistics space and CONCOR.  Excerpts:

Q: You have a very large exposure to CONCOR. What is your take on this stock or any of the container or logistics stock?

Kunj Bansal: I largely concur with your views. The only thing I would like to add is that one of the reasons besides probably Morgan selling, one of the fundamental reasons is that the railways hiked the charges 21% or 27% recently. Now that is a big cost for CONCOR and it will be difficult to pass on in the immediate future. Over a period of time, I am sure it will pass it on to the clients. So that is one of the reasons on the fundamental side why these stocks saw some supply and as a result, what might happen is that the expectation for December and March quarter would have to be brought down.

But on a medium to long term basis in terms of growth prospects and in terms of existing fundamentals and valuations; it is a stock which continues to be good. Extending that whole logistics space, Gateway Distriparks is another company one should look at. So that is a company which gave excellent results for the September quarter after kind of remaining subdued for last five-six quarters and looks like will continue to do well. It also has an exposure to railway transportation business but as a percentage of its total turnover is, it is around 10% or so. So the impact that it will have because of the railway increased charges will not be as much as that on CONCOR.

Interview: Texmaco Rail to see 40% Growth, Standalone Sept’14 sales at Rs.125.81 Crore

कोलकाता Kolkata (KOAA): Texmaco Rail and Engineering has reported a standalone total income from operations of Rs 125.81 crore and a net profit of Rs 3.33 crore for the quarter ended Sep ’14. Other income for the quarter was Rs 3.05 crore. For the quarter ended Sep 2013 the standalone total income from operations was Rs 122.61 crore and net profit was Rs 5.94 crore, and other income Rs 0.34 crore. Texmaco Rail shares closed at 89.15 on October 27, 2014 (BSE) and has given 34.36% returns over the last 6 months and 190.86% over the last 12 months.

Rail, Defence orders picking up; see 40% Growth: Texmaco Senior Vice President & CFO A.K.Vijay in an interview with Media

A.K.Vijay, Senior Vice President-Commercial & CFO, Texmaco Rail and Engineering
A.K.Vijay, Senior Vice President-Commercial & CFO, Texmaco Rail and Engineering

With the recent fillip in the defence sector, Vijay says the company has also received one of biggest wagon orders from defence sector, bagging an order worth Rs 387 crore for 974 wagons from the Ministry of Defence (India).

Texmaco Rail  posted a 44 percent decline in net profit at Rs 3.32 crore for the July-September quarter, as against Rs 5.93 crore for the corresponding quarter in the previous fiscal.

Despite weak Q2 performance, A.K.Vijay, Senior VP-Commercial & CFO, Texmaco Rail and Engineering is confident of a 40 percent revenue growth with significant performance improvement in FY15.

According to him, the company is mainly heavily into railways. The company’s poor performance was due to lack of railway orders flowing in. Therefore, they worked on orders other than railways. Now that railway orders have been released, production activities have picked up past few months.

With the recent fillip in the defence sector, Vijay says the company has also received one of biggest wagon orders from defence sector, bagging an order worth Rs 387 crore for 974 wagons from the Ministry of Defence, Government of India.

Furthermore, the company has proposed a merger with another mega rail player Kalindee Rail  to make itself a complete rail solutions provider. If the amalgamation goes through, it may prove to be a game changer for the organisation. Below is the edited transcript of the interview:

Q: There is still an underperformance in your steel foundry division. Overall income was also up by just 2.5 percent year-on-year (Y-o-Y) even if the quarter-on-quarter (Q-o-Q) performance is better. Do you think the second half will bring in better revenue performance?
A: We have suffered in the last two quarters. It was because orders from the railway which is the mainstay for the company till now had not flowed in and on April 1st 2013, April 1st 2014 we earned a lot from railways. The company was virtually working on orders other than railways. Now the railway orders have been released so the production activities have picked up from the month of September and automatically this effect is going to get into the second, third and fourth quarter in a major way.

Moreover with outlook on economy changing if you see the company’s result compared to the first quarter it has improved substantially wherein we had only Rs 60 crore turnover in the first quarter this quarter our turnover is close to Rs 159 crore. The profitability has improved dramatically. The loss of Rs 6.5 crore has got converted into a gross profit of Rs 5.5 crore.

So the changes are there and it is visible. Moreover, the company during the lean period has changed the league now. We are in kind of products which are hi-tech and where the global companies are joining hands with us. For recent example, we have recently developed an auto car rake for American President Lines-Vascor. India is in dire need of these rakes. The railways never buy these rakes; they are left to the private sector to be procured.

Now private sector is coming up in a big way on this because logistic companies are looking into this possibility that auto cars cant be transported through road transport, it has to go through rail transport and more and more export picking up for the country, how would you transport to the ports. Therefore, things are picking up and we have done very well on these.

Second thing which we have developed, we have supplied our first electric multiple unit (EMU) rake which is a passenger coach to Indian Railways. Now with this and with the grave scarcity of passenger coaches on the rail network and a large demand being kept unmet by the railway because they can’t produce themselves this again opens a new venue for us.

Third thing that is important for the company is defence, which is a major sector. Now we have received our largest ever order for wagons from defence. Now defence is opening up and they are coming into the possibility that yes, they should have self-reliance. With this self-reliance, the first order that has come is almost close to a thousand wagons, which is almost a railway size. So with these kind of things coming up and the company now joining hands with companies like Wabtec, the company has joined hands with companies like even KHI, companies joining hands with other companies also as well whereby new opportunities are emerging.

Q: You spoke about this largest wagon order from the defence sector, what is the quantum of that order?
A: It is about 1,000 numbers. Apart from Wabtec, the company has joined hands with other large multinationals also. As we had earlier announced, the proposed merger with Kalindee will be the game changer for the company. Merger with Kalindee will bring in much needed infrastructure segment into the company and this was specialised segment, which is the rail infrastructure, and today we are able to participate in tenders after acquisition of Kalindee, after taking over the control of Kalindee by the management. Tenders are valuing about Rs 1,000 crore, which is the first ever for us. So, accordingly, the outlook seems to be bright and I am particularly hopeful that yes, third and fourth quarter will be much better for the company and next year should be far better compared to what we have done till now in this year.

Q: What is the company’s cash holding position as of now compared to the Rs 300 crore that you had in the previous year?
A: Last year also we had close to Rs 200 crore and we also have Rs 200 crore now. The other things are in the share investments which are in JV companies and other companies, which we have started in last couple of years. Once a JV company that we had started was to encash on the leasing opportunity that is emerging in the rail segment and this leasing opportunity has now opened up in the country. Globally if you see the scenario, if you take the case of US, Europe – the railway freight cars are owned only by the leasing companies and they are being leased to the industry. In India, the railways own it and railways buy only limited numbers of wagons required only for their specific purposes and not for purposes that are for commodities specific. So these kinds of requirement are there for which we have identified in advance that what we should do for the future and we are investing over there.

Q: What do you expect FY16 to look like in terms of revenue growth?
A: This year we are looking for a revenue growth of around 40-50 percent and next year we are looking further growth over there to around same number. But it is too early to say this thing because the market we are in is infrastructure.

Q: 40-50 percent this year?
A: In this year compared to last year.

Q: But your first half is not much to write home about, in the second quarter you have done only 2 percent rise in revenues. Will you manage that much in the full year?
A: If you see the revenues that we did last year was about Rs 500 crore on gross basis and a 40 percent is Rs 700 crore which is much lower than what we were doing earlier. So there is no issue on that that we will not be able to achieve that.

Q: September you have done about Rs 170 crore in terms of total revenues. So by the end of full year both in revenues and in profits what are your expectations? You have to do Rs 500 crore by your estimates
A: We are talking on different numbers. You are talking on net revenues, we are talking on gross revenues. Gross revenue wise we have done about Rs 215 crore and against Rs 215 crore what we want to do in the next quarters is close to about Rs 500 crore.

Q: And on the profits?
A: That is a derivative. If your turn over is picking up profits automatically picks up but then that is market driven, it will depend upon what the market situation remains but we are hopeful of improving on profitability as well.

Q: Will your margins be better than 4 percent?
A: Yes, it will be better than the first two quarters, certainly.

Texmaco Rail gains 3.6% on BSE with new Acquisitions and Prestigious Orders

कोलकाता Kolkata (KOAA): Texmaco Rail & Engineering Ltd. has gained around 3.6% on BSE on new acquisitions and prestigious orders despite reporting a 44% decline in net profit at Rs 3.32 crore for the July-September quarter of the 2015 fiscal compared to the same quarter last fiscal when it was Rs 5.93 crore.

The company recently acquired Kalindee Rail Nirman (Engineers) Ltd. which will enable it to become Total Rail Solution Provider. Also, the company has entered into a joint-venture with Wabtec Corporation, USA, a leading provider of products for freight rail cars, passenger transit cars and locomotives. The JV will provide hi-tech freight products and latest of rail safety & control equipment to the indian railways network.

The company secured the single largest order for 974 wagons, valued at Rs 387 crore, from Ministry of Defence (India) to meet the needs of moving artillery equipment of the defence forces. Another prestigious order the company received is from APL-VASCOR (American President Lines-Vascor) for rolling out of Car Carrying rakes (Auto rake).

The Hydro mechanical division of the company has recently bagged large export orders for bridges from Bangladesh and Sri Lanka.

The new government thrust on the railways sector to open up new opportunities is likely to help the company.

The shares opened at Rs 91.90 and till 10.20 AM has hit a high of Rs 94.35 on the BSE while around 15,00,000 shares have changed hands on BSE and NSE combined.

L&T share price rises 2% after bagging order from Lucknow Metro Rail Corp.

Out of the total, L&T has bagged a Rs.631 Crore order from the Lucknow Metro Rail Corporation for construction of metros. The project is likely to be completed in two years

Larsen & Toubro (L&T), an engineering and construction conglomerate, witnessed a rise in share price on Tuesday after L&T Construction has won new orders worth Rs 14.23 billion (INR 1423 Crore) across various business segments, out of which, a Rs.631 Crore order is from L&T Metro Rail Corp for construction of Metros. The heavy civil infrastructure business has bagged Rs 6.31 billion order from the Lucknow Metro Rail Corporation for the construction of the Lucknow Metro.

The power transmission & distribution business has bagged three orders including additional orders from on-going jobs worth Rs 7.92 billion.

Shares of the company at Rs 1,492, up Rs.24.55, or 2% at the Bombay Stock Exchange (BSE) on Tuesday at 12:07 p.m.

The scrip has touched an intra-day high of Rs 1,496 and low of Rs 1,463.75. The total volume of shares traded at the BSE is 91,878

Out of the total, L&T has bagged a Rs 631 crore order from the Lucknow Metro Rail Corporation for construction of metros. As per the agreement, the infrastructure company has to construct 8.5 km elevated viaducts and 8 elevated corridors. The project is likely to be completed in two years.

“The power transmission has bagged three major orders including additional orders from on-going jobs worth Rs 792 crore. A turnkey order has been received from the Power Grid Corporation of India Limited (PGCIL) for the supply, erection, testing and commissioning of a 765 kV S/C transmission line between Lalitpur to Agra (Part–III) in Uttar Pradesh.

The contract is for the supply of 765kV EHV towers, insulator hardware materials and other transmission accessories. The order will be completed in 20 months,” it said in a press statement. Another order has been bagged from the Himachal Pradesh Transmission Corporation for the design, engineering, supply and construction of a 400/220/33kV Gas Insulated Switchgear substation at Lahal in the Chamba District of Himachal Pradesh.

The business also received an order from the North Bihar Power Distribution Company Limited for the supply, erection, testing and commissioning of 33/11kV power distribution network. At 12:03 hrs Larsen and Toubro was quoting at Rs 1,492.55, up Rs 25.10, or 1.71 percent on the BSE.

Central Provinces Railways Board of Directors Meeting: BSE Informed

Central Provinces Railways Company has appointed Mr. Shivanand R. Hemmady as Independent Director for a term of five years pursuant to section 149 of the Companies Act, 2013 & its schedule IV subject to approval of shareholders in the forthcoming Annual General Meeting

मुंबई Mumbai:  Central Provinces Railways Company Ltd has informed Bombay Stock Exchange that the Board of Directors of the Company at its meeting held on August 07, 2014, has approved the following:

  1. Appointed Mr. Shivanand R. Hemmady as Independent Director for a term of five years pursuant to section 149 of the Companies Act, 2013 & its schedule IV subject to approval of shareholders in the forthcoming Annual General Meeting.
  2. Appointed Mr. Arvind Kumar Gupta as an Independent Director for a term of five years pursuant to section 149 of the Companies Act, 2013 & its schedule IV subject to approval of shareholders in the forthcoming Annual General Meeting.
  3. Appointed Mr. Amitkumar Rander, as Whole Time Director in the capacity as Chairman and Chief Financial Officer as Whole time Key Managerial Personnel (KMP) of the Company subject to approval of shareholders in the forthcoming Annual General Meeting.
  4. Appointed Mr. Haresh Bhojwani, as the Additional Director and Whole time Director in the capacity as Managing Director arid Chief Executive Officer as Whole time Key Managerial Personnel (KMP) of the Company subject to approval of shareholders in the forthcoming Annual General Meeting.
  5. Decided to increase the borrowing limits (including the amounts already borrowed) of the Company and to create charge on the assets of the company upto Rs.5 (Five) Crores pursuant to provisions of Section 180 (1) (c) & section 180 (1) (a) of the Companies Act, 2013 subject to approval of shareholders in the forthcoming Annual General Meeting.
  6. Appointed M/s.D.S. Momaya & Co, as the Secretarial Auditor of the Company in terms of section 204 of the Companies Act 2013 for the FY 2014-15.
  7. Approved alteration of AOA by way of adoption of new set of AOA in terms of various provisions of New Companies Act 2013 subject to approval of shareholders in the forthcoming Annual General Meeting.
  8. The Board also approved following policies after recommendation from the Audit terms of provisions of Committee and Nomination and Remuneration Committee in Companies Act 2013:
  • Code of Conduct and Ethics
  • Insider Trading Policy
  • Nomination and Remuneration Policy
  • Policy on Independent Directors
  • Risk Management Policy
  • Policy on Related Party Transactions

SEBI grants time to Texmaco to acquire shares of Kalindee Rail

Mumbai: Market regulator Securities and Exchange Board of India (SEBI) has granted time to Texmaco Rail & Engineering to acquire shares of Kalindee Rail Nirman (Engineers) that were entangled with legal and operational problems.

Texmaco Rail, which had completed the open offer on December 11, 2013 – the date of completion of payment of consideration – was required to complete the acquisition by June 4, 2014.

However, 2.10 lakh shares held by Arvind Gemini, 1.01 lakh shares held by Lalit Kishore Gemini and 9.22 lakh shares held by Ram Dayal Sharma (all deceased) could not be completed due to issues related to the succession. The company could not acquire another 2.86 lakh shares held by Kalindee Estates due to operational issues in relation to transfer of locked-in equity shares.

Following this, Texmaco Rail had sought an extension from SEBI for completion of the acquisition. SEBI granted one year to acquire the shares of deceased persons and three months for Kalindee Estates shares.

FDI hike in Railways to have limited impact on markets

The moot point is that FDI limits in railways have been hiked. When asked about a market perspective of whether this is a big move, or is this only a sentimental booster and not a material booster, Rajat Rajgarhia, MD-Institutional Equities, Motilal Oswal Securities talks about 100% FDI in railways.  He said “at the moment, this is going to go down more as a measure of intent, and not as a measure of material impact. These are areas where we will have to see what kind of projects will come up. We will also have to watch out for which companies from the international arena will look to enter these ventures under what terms and conditions.

So, the impact in these areas will be seen only over a long period of time. The more immediate measure that markets were looking forward to was FDI in insurance. But this definitely seems to be facing some roadblocks. The key test for the government now would be how soon they are able to pass the insurance FDI bill.

FDI would be good for railways and defence too, but I do not think this is a game-changing event for the markets right now”.

Rupee rises 16 paise against the Dollar in early trade on Approval of FDI in Railways

Mumbai: The rupee recovered by 16 paise to trade at 61.33 against the dollar in early trade today at the Interbank Foreign Exchange market, tracking positive sentiments after the government approved FDI liberalisation in railway sector. Forex dealers said besides selling of dollars by exporters, strength in other currencies against the American unit overseas also supported the rupee, but a lower opening in the domestic equity market capped the gains.

The Cabinet yesterday cleared the long-delayed proposal for raising FDI limit in defence to 49 per cent and fully opened up the railway infrastructure segment, like high-speed trains, for foreign investment. The rupee had plunged 65 paise in its biggest single-day drop in over six months to end at 61.49 in yesterday’s trade against the greenback, hit by spike in dollar demand and negative cues from local stocks. Meanwhile, the benchmark BSE Sensex fell further by 54.13 points, or 0.21 per cent, to 25,611.14 in early trade today.

Shares of companies whose fortunes are linked to orders from Indian Railways and defence equipment makers are in focus on reports the Cabinet has on Wednesday, 6 August 2014 approved a plan to raise the amount of foreign direct investment allowed in its railway sector. The government has increased the foreign investment limit in the Railway sector to 100% as per the announcement by the Finance Minister Arun Jaitley in the Union Budget 2014-15 on 10 July 2014.

IT stocks may decline after global information technology, consulting, and business process outsourcing services provider Cognizant Technology Solutions Corp. unexpectedly cut its full-year revenue growth forecast to 14% from 16.5%, the slowest pace in its 20-year history, indicating an annual revenue growth of $10.1 billion. The management said that the company was facing client specific challenges.

Bharti Airtel, the promoter of Bharti Infratel will offer to sell up to 4.5 crore shares of Bharti Infratel today, 7 August 2014 through a sale on the separate window provided by the stock exchanges. In addition to the sale of shares, Bharti Airtel may also sell up to 4 crore shares in the sale. The sale of shares will commence at 9:15 IST and end at 15:30 IST today, 7 August 2014. The floor price of share sale shall be Rs 250 a share.

On a consolidated basis, Jindal Steel & Power (JSPL)’s net profit fell 20% to Rs 402 crore on 10% increase in turnover to Rs 4978 crore in Q1 June 2014 over Q1 June 2013.

EBITDA (earnings before interest, taxes, depreciation and amortization) rose 25% to Rs 1629 crore in Q1 June 2014 over Q1 June 2013. EBITDA margin increased to 33% in Q1 June 2014 compared with 29% in Q1 June 2013.

Total production of steel products rose 13% to 800,522 MT on 11% increase in sales to 737,471 MT in Q1 June 2014 over Q1 June 2013, JSPL said in a statement.

Jindal Power’s net profit fell 39% to Rs 195 crore on 9% increase in turnover to Rs 702 crore in Q1 June 2014 over Q1 June 2013. EBITDA rose 1% to Rs 427 crore in Q1 June 2014 over Q1 June 2013. EBITDA margin increased to 61% in Q1 June 2014 compared with 65% in Q1 June 2013. Power generation increased 29% to 1,682 kWh in Q1 June 2014 over Q1 June 2013.

Jubilant FoodWorks, Neyveli Lignite Corporation and Oracle Financial Services will unveil Q1 June 2014 results on Thursday, 7 August 2014.

Ador Fontech turned ex-dividend today, 7 August 2014, for dividend of Rs 3.50 per share for the year ended March 2014.

GHCL turned ex-dividend today, 7 August 2014, for dividend of Rs 2 per share for the year ended March 2014.

LIC Housing Finance turned ex-dividend today, 7 August 2014, for dividend of Rs 4.50 per share for the year ended March 2014.

Munjal Showa turned ex-dividend today, 7 August 2014, for dividend of Rs 3.50 per share for the year ended March 2014.

UPL turned ex-dividend today, 7 August 2014, for dividend of Rs 4 per share for the year ended March 2014.

Venky’s (India) turned ex-dividend today, 7 August 2014, for dividend of Rs 5 per share for the year ended March 2014.

VST Tillers Tractors turned ex-dividend today, 7 August 2014, for dividend of Rs 15 per share for the year ended March 2014.

Buy Container Corporation; Target Rs.1530: Maximus Securities

Maximus Securities is bullish on Container Corporation of India (CONCOR) and has recommended buy rating on the stock with a target price of Rs 1530 in its July 16, 2014 research report.

“Container Corporation of India Ltd. (CONCOR) was incorporated in March 1988 under the Companies Act, and commenced operation from November 1989 taking over the existing network of 7 Inland Container Depots (ICDs) from the Indian Railways. From its humble beginning, it is now an undisputed market leader having the largest network of 62 ICDs/Container Freight Stations (CFSs) in India. In addition to providing inland transport by rail for containers, it has also expanded to cover management of Ports, air cargo complexes and establishing cold-chain. It has and will continue to play the role of promoting containerization of India by virtue of its modern rail wagon fleet, customer friendly commercial practices and extensively used Information Technology.

CONCOR is committed to providing responsive, cost effective, efficient and reliable logistics solution to its customers. It strives to be the first choice for its customers. CONCOR is a customer focused, performance driven, result oriented organization, focused on providing value for money to its customers.

CONCOR’s core business is characterised by three distinct activities, that of a carrier, a terminal operator, and a warehouse operator. Majority of CONCOR terminals are rail-linked, with rail as the main carrier for haulage. As rail is price-competitive over long distances, the price advantage can be passed on to clients, thus allowing for flexible and competitive pricing. Though rail is the mainstay of CONCOR’s transportation plan, some CONCOR terminals are exclusively road-fed as well.

CONCOR’s terminals provide a spectrum of facilities in terms of warehousing, container parking, repair facilities, and even office complexes.

CONCOR also use’s its terminal network to plan Hub and Spoke movements that allow single customers to move cargo to multiple locations, with CONCOR taking care of the distribution and re distribution requirements.

Valuations: Considering the improvement in volumes, stable margins, large cash balance, balance strength, market leader status with increasing market share, tailwinds such as the Dedicated Freight Corridor & GST, growth in global economy and formation of a stable government at the Centre, we value CONCOR with a P/E of 22.3x FY16E EPS to arrive at a target price of Rs 1530/share. Buy the stock,” says Maximus Securities research report.

To read the full report, Click Here: ContainerCorp_Maximus_220714

CONCOR stocks jumps after Government grants ‘Navratna’ status

Container Corporation of India rose 2.14% to Rs 1,333.90 at 10:21 IST on BSE after the company said it was granted Navratna status by Department of Public Enterprises. The company made the announcement after market hours on Wednesday, 23 July 2014.

Meanwhile, the BSE Sensex was down 26.39 points, or 0.10%, to 26,120.94.

On BSE, so far 4,271 shares were traded in the counter, compared with an average volume of 19,423 shares in the past one quarter.

The stock hit a high of Rs 1,350.75 and a low of Rs 1,320.80 so far during the day. The stock hit a 52-week high of Rs 1,409.70 on 8 July 2014. The stock hit a 52-week low of Rs 636.99 on 2 August 2013.

The stock had outperformed the market over the past one month till 23 July 2014, rising 11.46% compared with 4.46% rise in the Sensex. The scrip had also outperformed the market in past one quarter, rising 35.70% as against Sensex’s 14.30% rise.

The large-cap company has an equity capital of Rs 194.97 crore. Face value per share is Rs 10.

Container Corporation of India’s (Concor) announced that Ministry of Heavy Industries and Public Enterprises, Department of Public Enterprises, Government of India granted Navratna status to the company on 23 July 2014.

Net profit of Concor rose 8.94% to Rs 246.03 crore on 5.30% rise in net sales to Rs 1296.63 crore in Q4 March 2014 over Q4 March 2013.

Concor provides logistics solution. It has the largest network of 62 inland container depots (ICDs)/container freight stations in India. In addition to providing inland transport by rail for containers, it has also expanded to cover management of ports, air cargo complexes and establishing cold-chain.

The Government of India (GoI) holds 61.80% stake in Concor (as per the shareholding pattern as on 30 June 2014).

Texmaco Rail posts Q1 net loss at Rs.7.8 Crore

Texmaco Rail posted a net loss of Rs 7.8 crore in first quarter (April-June) of current financial year 2014-15 as against profit of Rs 11.4 crore in corresponding quarter of last fiscal. Board meeting on July 21, 2014, approved further issue of securities at such premium as may be approved by the Board and subject to the approval of the shareholders of the Company in accordance with the Companies Act, 2013 passed.

Texmaco Rail posted a net loss of Rs 7.8 crore in first quarter (April-June) of current financial year 2014-15 as against profit of Rs 11.4 crore in corresponding quarter of last fiscal. The company’s net sales were at Rs 41.6 crore versus Rs 143.6 crore, Y-o-Y. On July 21, 2014 Texmaco Rail and Engineering ended at Rs 94.30, down Rs 5.10, or 5.13 percent.

Texmaco Rail & Engineering Ltd has further informed BSE that the Board of Directors of the Company at its meeting held on July 21, 2014, has approved further issue of securities of the Company at such premium as may be approved by the Board and subject to the approval of the shareholders of the Company in accordance with the Companies Act, 2013, including, without limitation, Sections 41, 42, 54, 55, 62, 63 and 71 thereof, and also including any relevant provisions of the Companies Act, 1956, through one or more public issue and/or on a private placement basis and/or preferential issue and/or any other kind of issue and/or placement as may be permitted under applicable law from time to time, for an aggregate amount not exceeding Rs. 300 Crore (Rupees Three Hundred Crore).Further, the Company has informed that the Company is currently in the process of merging Kalindee Rail Nirman (Engineers) Limited into the Company by way of a scheme of amalgamation, and in case any change in the scheme of amalgamation is deemed necessary pursuant to the proposed further issue of securities, the revised documents / information shall be shared with the exchanges subsequently.

Impact of Rail Budgets on Indian Stock markets over the years

Similar to the Union budget, announcement of the Indian railway budget too is known to have a positive or negative effect on the Indian Stock market.

On 8 July, Railway Minister Sadananda Gowda presented the rail budget. In tune with it, the Indian stock indices traded lower after surging for a few hours. The Sensex opened higher by 66.84 points at 26166.92, while Nifty also hit higher by 14.45 points at 7804.05 points during opening session. But, the index recorded its biggest single day fall in over 10 months during closing hours.

In the past too, budgets have had an impact on Indian stocks. The table below represents the history of Indian rail budgets from 2006, which had a direct impact on the value of Indian stock indices on that particular day:

Rail Budget 2014-15 much more than ordinary Maintenance Budget: Equity Market Analysts

Railway Minister D.V.Sadananda Gowda has presented Railway Budget 2014-15 on 8th June in the Parliament.  Increased passenger amenities, more safety measures, timely completion of projects and increased financial discipline are the main highlights of the Railway Budget.

Commenting on the rail budget, Prashanth Tapse, AVP Research, Mehta Equities said, “We see this budget was much more than an ordinary maintenance budget because of time limitation and due to paucity of funds. It was the first rail budget under the Prime Minister Mr.Narendra Modi, and Government needs more time to work out the real blue print to change the face of Indian railways.”

“We liked the thought on FDI in railway and PPP models approach which will act as game changer strategy for railways going forward, but this has to be looked upon for more details after govt give a clear blue print,” he said.

“Railway minister has also given a practical approach in focusing on completing ongoing projects with limited funds, which if implemented will boost the railway revenue respectively.”

“We expect some more announcements in the coming weeks and will be important to understand the ideology and road map of Modi lead Govt,” he opined.