Rail budget 2012-13: Rail stocks crash after a good start

MUMBAI: Shares of the companies whose prospects are linked with orders from the Indian Railways failed to sustain early morning gains due to profit-booking at higher levels after the Railway Budget was presented on Wednesday.

In the absence of any further triggers that could help keep the prices firm, investor rushed to cash out their investments in most of the stocks led by Kalindee Rail and Texmaco Rail, according to brokers.

Container Corporation (Concor), Titagarh Wagons, Kalindee Rail and Texmaco Rail are among the notable stocks which generally see some action at the time of railway budget every year. While they gained between 1.7% and 3.5% ahead of the 2012-13 Railway Budget on Wednesday, the stocks came off sharply to end with a loss of 1.5% to 6.6% on the BSE.


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The Union railways minister Dinesh Trivedi marginally increased passenger fares in the Railway Budget and announced 75 new express trains and 21 new passenger trains. He said the ministry will emphasis on improving infrastructure and modernising railways for which an investment of 5.60 lakh crore will be required.

"Though railway orders are large and add to a company's volumes, margins are not protected and so the growth in bottomline is restricted," said KR Choksey Shares and Securities managing director Deven Choksey, explaining the lack of sustainable interest in the companies supplying to the Indian Railways.

Among the top four loser stocks, Kalindee Rail Nirman slipped 6.6% to 104.9. The company undertakes installation, commissioning of signaling and telecom projects and also executes gauge conversion projects for Indian Railways.

Texmaco Rail & Engineering, which manufactures freight cars and wagons, lost 6.1% to 66.9. Concor, the country's leading containers company, ended 1.5% down at 886 while the wagon manufacturer Titagarh Wagons fell 4.3% to 411.6 on the BSE on Wednesday.

Unlike these companies, a few others like ABB, Siemens and BEML, which also offer services to the Indian Railways, ended positive on Wednesday. Analysts feel they are in a better position to protect profit margins, given their large size and wide client base. Their stocks rose marginally on hopes of improvement in order flow from Railways on Wednesday.