News » National

Updated: February 28, 2013 01:59 IST

Companies linked to Railways and market unimpressed

Special Correspondent
Comment   ·   print   ·   T  T  
Porters watch the Railway Budget speech of P.K. Bansal, at the New Delhi Railway Station on Tuesday. Photo: Ramesh Sharma
— Photo: Ramesh Sharma
Porters watch the Railway Budget speech of P.K. Bansal, at the New Delhi Railway Station on Tuesday. Photo: Ramesh Sharma

Those catering to the Railways lose huge amounts of market cap

With Railway Minister Pawan Kumar Bansal compromising the long term interest of the Railways by not doing enough to improve its finances, stock markets and commentators remained unimpressed with the budget he presented on Tuesday.

All companies catering to the railway sector came under selling pressure and lost huge amount of market cap as investors sold these stocks since the budget showed no direction for radical changes in approach and seriousness to address key concerns.

“Railways not moving forward”

“It is old wine in a new bottle. The Railways are not moving forward. Socialist approach is fine. But if he does not augment money from somewhere, how can he raise resources for modernisation and amenities? Twenty per cent of the rolling stock has outlived their life, modernisation has taken a backseat; there is emphasis on safety and security. All stations are prime targets of terrorists. Several other issues are bogging the Railways. Keeping fares unchanged does not solve all these,” said a top executive of a company associated with the Railways, asking not to be identified.

“What is the guarantee that he would meet the target? If the economy does not move, then?” the executive added.

“Though a special budget has been sanctioned to maintain cleanliness in trains, it is disappointing that the Minister has not budgeted for any advanced electronic security systems to be installed in Railway premises, considering the various security threats that millions face in public transport,” said MD of Zicom Electronic Security Pramoud Rao.

“The budget is a shrewd balance between populism and pragmatism, though overall it lacked an insight to improve the Railways' revenues as there was no clear road map to augment its capacity and overall rail infrastructure,” said CEO & MD of Essar Steel Dilip Oommen.

Chairman and Managing Director of Hind Rectifiers S. K. Nevatia, however appreciated the budget.

“Importance to modernisation”

“The noteworthy positives in the budget would be the completion of 1,200 km of electrification and the gauge conversion of 450 km from narrow to broad gauge. The modernisation has been given some importance with special emphasis on safety. The progress in Kolkata Metro and introduction of AC coaches in the suburban trains of Mumbai is a welcome move,” he said.

Despite Mr. Nevatia’s statement, his company’s stock was bear hammered at the stock markets. Hind Rectifiers’ stock plunged 8.82 per cent to close at Rs. 60.50. Kalindee Rail plunged 11.62 per cent to close at Rs. 70.35.

Stone India plunged 16.21 per cent to close at Rs. 19.90. Kernex Microsystems plunged 15.13 per cent to close at Rs. 44.30, while Texmaco Rail closed with a loss of 11.36 at Rs. 54.60. Titagarh Wagons closed with a loss of 8.14 per cent at Rs. 245.45, while BEML closed with a loss of 2.80 per cent at Rs. 241.65.

The overall stocks markets also came under selling pressure due to the ‘lacklustre’ budget. The BSE Sensex plunged 316.55 points or 1.64 per cent to close at 19015.14.

“The budget seeks to strike a balance between growth and fiscal discipline. Overall, the Railway Minister has tried to keep the expansion plans within the limits of low revenue growth and overall budgetary constraints. Market’s reaction to the budget was tepid. There was not much in the budget to impact the markets. Most railway-related stocks ended sharply lower,” said head of PCG (Private Client Group) Research, Kotak Securities, Dipen Shah.

“Market sentiment was weak to start with and the selling pressure continued to intensify throughout the day, leading to a loss of more than 300 points for the Sensex at the close. Weak opening of the European markets added to the selling pressure,” Mr. Shah said.

This article is closed for comments.
Please Email the Editor

Tamil Nadu

Andhra Pradesh

Other States






Recent Article in National

Diversity deficit across apex bodies of parties

The BSP is an exception, where the majority of the members in the Central Executive Committee (CEC) belong to the Scheduled Castes. »