Disappointment over rail budget dents railroad firms’ stocks (Roundup)

Mumbai, Feb 25 (IANS) Disappointment over lack of any big ticket projects in the railway budget proposals for 2016-17 dented stocks of companies associated with the Indian railroads on Thursday.

The equity markets ignored the fact that the railway budget 2016-17 proposes to develop more infrastructure like freight corridors, new lines and electrification of old ones.

Capital outlay in the railway budget has been perceived to be low, in order to meet the central government’s fiscal deficit targets.

At the Bombay Stock Exchange (BSE), shares of majority of firms associated with the railway sector ended in the red, after the Railway Minister Suresh Prabhu presented the Railway Budget 2016-17.

Stocks of BEML declined by 4.06 percent to end at Rs.976.65 from previous close of Rs.1,017.95 per equity share.

The ABB India scrip fell by 1.14 percent to Rs.1,062 from previous close of Rs.1,077.25.

Similarly, scrip of Reliance Industrial Infrastructure dropped by 1.04 percent to Rs.381.30 from previous day’s close at Rs.385.30.

Shares of Hindustan Construction Corporation (HCC) declined by 0.86 percent to Rs.17.20 per equity share from the previous close of Rs.17.35.

Larsen & Turbo (L&T) stocks dropped by 2.37 percent to Rs.1,086.90, from their previous close of Rs.1,113.25.

In contrast, Siemens stocks rose by 0.04 percent to Rs.994.25 from previous close at Rs.993.85.

In the logistics space, shares of Container Corporation of India and Gateway Distriparks showed a significant rise.

Container Corporation of India’s stocks rose by 2.98 percent to Rs.1,167.05 from previous close of Rs.1,133.25.

The scrip of Gateway Distriparks gained by 3.91 percent to Rs.222 from its previous close at Rs.213.65.

On the other hand, scrip of Allcargo Logistics dropped by 1.38 percent to Rs.146.25 from previous day’s close at Rs.148.30.

Timken stocks fell by 2.07 percent to Rs.431.05 from previous close at Rs.440.15 per equity share.

In the case of wagon makers, shares of all major firms showed a significant drop.

The shares of Kalindee Rail Nirman (Engineers) declined by 9.26 percent to Rs.122.50, moving down from previous close of Rs.135.

Texmaco Rail and Engineering fell by 8.78 percent to Rs.119.55 from previous close at Rs.131.05.

Stocks of Titagarh Wagons dropped by 8.40 percent to Rs.113.35 from previous close of Rs.123.75.

Equity shares of other firms, such as Kernex Microsystems, Hind Rectifiers and Stone India declined, whereas those of MIC Electronics and KEC International surged.

Kernex Microsystems showed a fall of 4.89 percent to Rs.35.95 from its previous day’s close at Rs.37.80.

Scrip of Hind Rectifiers declined by 7.69 percent to Rs.63 from the previous close of Rs.68.25.

Another firm, Stone India’s stocks dropped by 5.74 percent to Rs.64.05 from its previous close of Rs.67.95 per equity share.

On the other hand, shares of MIC Electronics and KEC International rose after the minister announced proposals for further electrification of lines and usage of LED bulbs at various railway stations.

The shares of MIC Electronics rose by 0.52 percent to Rs.19.45 from the previous day’s close at Rs.19.35.

Scrip of KEC International surged by 2.86 percent to Rs.106.05 from its previous close of Rs. 103.10.

“Ambitious capex plans with no clarity on funding led to correction in the railway stocks,” Vaibhav Agarwal, vice president and research head at Angel Broking.

Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services informed that investors took notice of the fact that railway revenue targets might not be met due to a slowdown in economic activity.

“The budget showed that the minister looked at monetising the internal resources of the railway, as revenue realisation from freight and passenger traffic might not be sufficient,” James told IANS.

“There was no big ticket announcements in the budget due to the fact that the revenue relization might not be there.”

Nitasha Shankar, vice president for research with YES Securities, the rail budget turned out to be a non-event.

“Though the budget look at monetizing assets, focus on PPP (public private partnership) models for execution in addition to suggesting that they could see funding from LIC (Life Insurance Corporation) to top up the budgetary support; however it remains to be seen how it will all pan out,” Shankar noted.

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