Companies directly related to the fortunes of Indian Railways received a beating on the bourses after the Railway Budget failed to impress, especially on the revenue generation front and higher operating ratio. Also, the broader market movement was weak with benchmark indices down 0.5-0.6 per cent.
Declines 2-11% The BSE Midcap 100 and the BSE Smallcap 100 underperformed the S&P BSE Sensex and Nifty 50 with a fall of 1 per cent and 0.8 per cent, respectively.
Stock price of companies, such as Titagarh Wagons, Timken India, Texmaco Rail and Engineering, BEML, Kalindee Rail Nirman (Engineers), Hind Rectifiers, Stone India and Kernex Microsystems declined in the range of 2.2-11 per cent.
“I am not excited about the Budget as no fresh idea or innovation was announced. Also, I feel the operating ratio for next fiscal is definitely not achievable and it will cross 92 per cent,” said Pankaj Sharma, Head of Research at Equirus Securities.
UR Bhat, Managing Director at Dalton Capital Advisors (India), is of the opinion that the Railway Minister has done a good job but there was no specific announcement related to the listed companies.
Overall, the Railway Budget is seen as lacklustre by market participants, with no positive or immediate takeaways for the listed companies catering to the railways.
Capex outlay of ₹1.21 lakh crore has almost matched the expectation of ₹1.25 lakh crore. Railway Minister Suresh Prabhu has set the gross revenue target at ₹1.84 lakh crore in FY17, up 10 per cent year-on-year. But this is disappointing as a similar amount was expected to be generated in FY16. Revenue at ₹1.67 crore came in weaker in FY16 compared to the target of ₹1.83 lakh crore.
No fare hike in this year’s Budget and no meaningful pick-up in economic activity will affect revenue generation in FY17 and, in turn, the operating ratio.
CCTV boost
However, companies involved in electronic security products such as MIC Electronics and Zicom Electronic Security Systems, bucked the trend with the stocks ending with gains of 2.4-4.5 per cent.
Railway Budget announced that all major stations will be covered by CCTV in a phased manner.
Bartronics is another stock which will benefit due to Railway Minister’s plan to use bar coded tickets on pilot basis at some stations. The stock closed up 2 per cent.
Logistics companies Gateway Distiparks and Container Corporation of India also ended up in the range of 3-4 per cent due to fare not being hiked.