Rail-related stocks rally; RITES, Rail Vikas Nigam surge over 10%

Indian Railways has started the process to invite private players in passenger train operations.

Shares of rail-related stocks rallied up to 14 per cent in the early morning trade on the BSE on Thursday on the report that the Railways has started the process to invite private players in passenger train operations. The project would entail a private sector investment of about Rs 30,000 crore, it said.

The stock of RITES rallied 14 per cent to Rs 293, while Rail Vikas Nigam Limited (RVNL) surged 13 per cent on the BSE. Ircon International was up 10 per cent at Rs 99, followed by Indian Railway Catering and Tourism Corporation (IRCTC) - up 7 per cent at Rs 1,463 and BEML by 3 per cent at Rs 649.

At 09:27 am, these stocks were trading higher in the range of 2 per cent to 9 per cent on the BSE, as compared to a 0.78 per cent rise in the S&P BSE Sensex.

According to a Business Standard report, the requests for qualification (RFQs) have been invited from private firms for operating train services over 109 origin-destination (OD) pairs of routes. The routes have been formed into 12 clusters across the Indian Railways network. CLICK HERE TO READ FULL REPORT

"The objective of this initiative is to introduce modern technology rolling stock with reduced maintenance, reduced transit time, boost job creation, provide enhanced safety, provide world-class travel experience to passengers," the Railways said.

The concession period for the project will be 35 years. The private entity will pay fixed haulage charges and energy charges based on actual consumption, besides a share in gross revenue determined through a transparent bidding process to the Railways. The national transporter will be providing drivers and guards to operate these trains for the private players. The operation of the trains shall conform to key performance indicators like punctuality, reliability, and upkeep of trains.

“This is the first initiative of private investment for running passenger trains over the Indian Railways network. The majority of the trains will be manufactured in India. The private entity shall be responsible for financing, procuring, operation, and maintenance of the trains,” the Railways said in a statement.