Rail Stocks Gain After Indian Railways Invites Private Players To Run Trains

Rail stocks including the likes of IRCTC, Rail Vikas Nigam, RITES jumped in intra-day trade on July 2, 2020 up to 14% after the national carrier Indian Railways invited proposals from private entities to run passenger trains. The project would involve private sector investment of nearly Rs. 30,000 crore.

Rail Stocks Gain After Indian Railways Invites Private Players To Run Trains

Among rail stocks, RITES climbed 14% to day's high price of Rs. 292.9, Rail Vikas Nigam spiked 13.5% to Rs. 21.45, Ircon International jumped 10% to Rs. 99 and IRCTC scaled higher by 7% to Rs. 1463 and BEML gained 3% to Rs. 649 per share on the BSE.

The railways ministry has asked for requests for qualifications (RFQ) from private players to operate train on 109 pairs of routes by introducing 151 modern trains. "This is the first initiative of private investment for running passenger trains over the Indian Railways network. The private entity shall be responsible for financing, procuring, operation and maintenance of the trains", said the ministry in a statement. Also, it said that most of the train will be built under the government's ambitious 'Make in India' plan.

Also, the ministry told that these trains will be manufactured for a maximum speed of 160 km per hour and journey time will also come down drastically. "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," it added.

Further as part of the project, the private entity would pay Indian Railways fixed haulage charges, energy charges based on the consumption and a share in gross revenue as decided via the apparent bidding process.

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