Railway-linked stocks jump after railways opens doors for private trains

Shares of 7 companies whose fortunes are linked to orders from Indian Railways rose by 1.66% to 12% after India's Railway Ministry began the formal process to allow a private company to run trains on 109 routes.

Texmaco Rail (up 12%), Hind Rectifiers (up 5%), Titagarh Wagons (up 5%), RITES (up 4.69%), IRCON International (up 4%), IRCTC (up 3.87%) and Bharat Heavy Electricals (up 1.66%) advanced.

Meanwhile, the Nifty was up 129.15 points, or 1.24% at 10,559.20.

The Ministry of Railways on Wednesday (1 July) invited Request for Qualifications (RFQ) for private participation for operation of passenger train services over 109 origin destination (OD) pairs of routes through introduction of 151 modern trains (rakes).

The 109 OD pairs have been formed into 12 clusters across the Indian Railway network. Each train shall have a minimum of 16 coaches. The project would entail private sector investment of about Rs 30,000 crore. The concession period for the project shall be 35 years.

This is the first initiative of private investment for running passenger trains over Indian railways network. The private entity shall be responsible for financing, procuring, operation and maintenance of the trains.

The private entity shall pay to Indian railways fixed haulage charges, energy charges as per actual consumption and a share in gross revenue determined through a transparent bidding process. These trains shall be operated by the driver and guard of Indian Railways.

Majority of trains will be manufactured in India (Make in India). Trains shall be designed for a maximum speed of 160 kmph. There would be a substantial reduction in journey time. The running time taken by a train shall be comparable to or faster than the fastest train of Indian Railways operating in the respective route.

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, and also reduce demand supply deficit in the passenger transportation sector.

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