Rail Budget: Steel companies to gain from new tracks

The introduction of new trains, new railway stations, new tracks and gauge conversion in the railway budget proposal are all being seen as critical ingredients for increasing steel consumption in the country and will give a boost to steel companies, especially state-owned SAIL and Jindal Steel and Power Limited.
The railway minister Dinesh Trivedi said the government plans to modernise 19,000 km of railway tracks, which cater to 80% of traffic.The railways plan to spend Rs 63,212 crore on track modernisation in next 5 years.
“SAIL & railways have been partners in progress for several decades, and this relationship would be strengthened in the coming years in view of the massive modernization & expansion plan of the Indian Railways, as announced by the railways minister,” said SAIL chairman C S Verma adding that the rail budget outlines an encouraging scenario for the short and mid-term. Railway investment during the 12th plan is proposed to be Rs 7.35 lakh crore, almost four times the previous plan.
In the private sector, Jindal Steel and Power is seen as the biggest beneficiary of the rail budget because of its capability of making 121 metre long track rails, the longest in the world. “JSPL is dedicated to transform the dream of operating high-speed trains into a reality,” the JSPL website said.
However, shares of all listed steel firms ended in the red on Wednesday after the rail budget. Shares of SAIL and JSW Steel ended marginally down at Rs 100 and Rs 783, while shares of Tata Steel and JSPL were down 1% to Rs 462 and 604 respectively.
“The market was not able to connect with the rail budget directly in terms of funds allocation of the products and the company’s manufacturing them,” said investment advisor S P Tulsian, adding that any plan to put up new railway lines could boost steel companies like JSPL. Over the past one week, shares of JSPL rose 12% in anticipation.
The Indian Railway system, the second largest in the world, is the lifeline of the nation’s economy and a vital infrastructure sector.
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