RAILWAY BUDGET SPECIAL
Turnaround Express going strong
Indian Railways (IR) could be one of the best Indian turnaround stories of recent times. Last year in our special report on Union Railway Budget, we had told you how after coming very close to a financial crunch the loss-making national carrier managed to turn around its operations. The good news is IR continues to impress us with its performance. Thanks to the buoyancy in the freight rates, euphoric growth in the gross domestic product (GDP) and steady rise in passenger traffic, the total traffic receipts of the IR are expected to have grown by 15.5% in FY2006 and are estimated to grow at 9.6% in FY2007. With the leverage effect coming into play, the top line of IR too is growing at a good pace, leading to strong operating cash flows and higher capital expenditure (capex).
The man who is responsible for the magical transformation of IR, Union Railways Minister Lalu Prasad Yadav, is all set to present his fourth Union Railway Budget on February 26. The event is keenly awaited by the stock market since any proposal to increase IR's capex in the forthcoming railway budget would bode well for the capital goods companies. In this report we shall tell you which companies stand to benefit the most from a possible hike in IR's capex.
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