What to expect from rail budget and how that can impact some stocks on Feb 25

All eyes are on big bang rail budget will be tabled in Parliament on February 25. There are various expectations such as cleaner and more comfortable bed rolls in air-conditioned coaches and renting out of bedrolls for sleeper and general class should be made available by Indian Railways.The expectations from rail budget for both passengers and industry perspective too are very high this time.

The budget is expected to focus on enormous capacity escalation projects with an increased outlay of about Rs 1.25 lakh crore. According to media reports, railway budget is backing enough Gross Budgetary Support (GBS) from the finance ministry and will have to depend mostly on External Budgetary Resources (EBR) for funds.

The rail budget will act as an indicator that how union budget will be crafted. The initiative will be to manufacture 200 kmph (kilometer per hour) train coaches indigenously. Another implementation will be for new design coaches and vaccum toilets. These initiatives will be useful for companies who are in the actively manufacturing rail coaches like Titagarh Wagons, Kalindee Rail Nirman (Engineers).

There are headwinds to roll out of growth of dedicated freight corridor and expansion of high speed network. Another announcement may be connecting Jammu & Kashmir, North Eastern states and hilly regions on a priority basis. The wide network of rail will ensure logistics related stocks may have certain reactions. The stocks like Gati, Allcargo logistics, Container Corporation of India will be in focused on the rail budget day.

The rail budget will also focus on upgradation of station complexes for comprehensive government services, skill development. Further passenger amenities will also improved accordingly. The stocks like Larsen & Toubro (L&T), Siemens, Reliance Infrastructure will be focused on development of railway stations, provide modernised facilities and planting high speed metro lines in coming years.

There might be announcement during the Budget on roadmap of its e-commerce entity, Indian Railway Catering and Tourism Corporation (IRCTC). The entity’s revenue crossed Rs 20000 crore and PAT of Rs 130 crore as of March 2015. IRCTC has valuation about USD 5-6 billion (Rs 40000 crore). The rail budget may thorough light on stock market listing of IRCTC.