Invest in railroads
âThe growth in core sectors is expected to aid demand for coal, cement, fertilizers and steel thereby increasing the goods traffic. The expected growth in goods traffic coupled with the construction of dedicated rail freight corridor will generate huge demand for wagons from Indian Railways (IR) thus benefiting Titagarh Wagons Ltd. (TWL) in a huge way.
âWith the container traffic expected to grow at 18.3% CAGR in FY08-FY14E and IR opening up containerized operations to private sector players, huge order for wagons is expected to flow from them translating into huge opportunity for TWL.
âWith the plan for metro systems gathering pace, we believe TWL's foray into EMU and metro coach segment would be timely and ensure growth.
âOwing to the boom in infrastructure sector, TWLâs special projects division which manufactures bailey bridges and special equipments for nuclear power plants is expected to benefit hugely.
â Led by increased demand of construction and mining equipments due increased activities in infrastructure sector, TWL's presence in the HEMM equipment segment will ensure strong growth.
Valuation and view
With the boom in Indian infrastructure and the government's thrust on improvement in the Indian rail network, we believe that TWL is well placed to benefit and poised for growth.