Kalindee Rail-Hi Speed Rail Links

Kalindee Rail Nirman: Building up the National Train Network

BSE 522259, CMP Rs 147

 

Delhi based Kalindee Rail is emerging as one of the most exciting infrastructural plays. With the GOI announcing huge outlay on enhancing the Railways network and Metro Rail expected to be set up in 4 more cities of Mumbai, Bangalore, Hyderabad and Chennai, Kalindee could become a prime beneficiary. Kalindee has already executed 22 kms of ballast free tracks for the Delhi Metro and a large order flow is likely to come its way.

 

Financials

 

Consolidate Revenues of Kalindee Rail would exceed Rs 250 crore (Rs 90 crore), with after tax profits of Rs 12.6 crore (Rs 3.6 crore). Consequently, on the post-merger Equity of Rs 8.77 crore Kalindee will be able to report an EPS of Rs 14.3 (Rs 7.3). At the current price of Rs 147, the stock quotes at a PE of 10 based on near term projected earnings.

 

But this is just part of the story. With the orders in hand and under the bidding process FY08 Revenues will rise to Rs 400 crore and to Rs 700 crore in FY09. After tax profits will rise to Rs 24 crore and Rs 49 crore  in the same period.

 

Background

 

Indian Railways (IR), the world's second largest rail network having a network of 63,465 route km, in 2003, formed Rail Vikas Nigam Limited, a 100 per cent government-owned company, to execute all projects under the National Rail Vikas Yojana, which was initiated in 2002. These projects pertain to rail-port connectivity, developing multimodal corridors to the hinterland, construction of mega bridges and strengthening of the Golden Quadrilateral. The RVNL has already identified about 56 projects valued about Rs. 30 billion.

 

In 2005, the Committee on Infrastructure headed by the Prime Minister approved the Rs 600 billion freight corridor railway project. The Railway Budget 2006-07 also proposed the construction of the dedicated multimodal high axle load freight corridor with computerized control on the western and eastern routes at an estimated cost of Rs 220 billion in the first phase. The freight corridor, which will add 10,000 km to the existing rail network, is expected to change the dynamics of country's transportation sector.

  

Mass rapid transit system (MRTS) projects are gaining momentum. The progress of the Delhi MRTS project is notable. In all, 62.19 km of the Delhi metro is now fully operational and it is planned to extend its network outside the capital city. Recently, in March 2006, the cabinet approved the MRTS projects of Mumbai, Bangalore and Hyderabad. These projects are now in various stages of implementation.

 

The budget has projected an increase of 32 per cent in the annual plan outlay over the previous year to Rs 234.75 billion, excluding provisions for national projects.

  

Construction on the Rs 600 billion project is expected to commence in 2006. Once completed, the rail freight corridor project would add 10,000 km to the existing rail network. This is extremely significant considering that only 9,625 km has been added since 1950-51

  

This brings forth the extent of business potential lying ahead for the highly experienced company in Railway Sector like Kalindee in coming years.

Safe Harbor Statement:

Some forward looking statements on projections, estimates, expectations, outlook etc are included in this update to help investors / analysts get a better comprehension of the Company's prospects and make informed investment decisions. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.

 

Investors are advised to consult their certified financial advisors before making any investments.