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http://www.kotaksecurities.com/pdf/dmb/MorningInsight15032012.pdf
RAILWAY BUDGET 2012-13
Focus on economic viability; uncertainty ahead
q The 2012-13 railway budget has focused on raising revenues and improving the operating ratio.
q With a view to increase revenues, passenger fares have been raised - the
first time after several years. Freight rates had been increased a few days
back and that too, steeply.
q Operating ratio, consequently, is expected to come down to 85% v/s
95% in FY12RE. The target is to reduce the same to 75% by 2016-17.
q Growth rates in freight loading and passenger traffic have been assumed
at a reasonable 5.6% and 5.4%, respectively. FY12 freight loading
growth was at about 5%.
q Economic viability, rather than social desirability, has been preferred.
q The Railway Minister has also proposed to set up Railway Tariff Regulatory Authority (RTRA) It would be a step towards delinking of Indian
Railways and Ministry of Rail to avoid conflict of interest, we believe.
q Railway modernization and safety will be targeted. Recommendations
made by expert committees to be adopted.
q Continued investments have been proposed towards additional railway
lines, doubling of lines, gauge conversion and electrification. Execution
to be important, in our view.
q Plan outlay is budgeted to rise to a record Rs.601bn.
q While the GBS is seen at Rs.240bn, internal accruals are expected to bring
in Rs.181bn.
q PPP is proposed to be encouraged; strategic initiatives outlined
q Overall, the budget is focused on controlling the deficit while continuing
investments to make railways one of the largest and best networks globally. It tries to align the annual targets with the Vision 2020 statement
of the railways and the 12th 5-year plan.
q However, implementation has to follow to make the proposals effective.
q Moreover, there is uncertainty whether the budget proposals will be
passed in the current form. We will watch out for the same.
q For the markets, it is largely a non-event. Whether the focus on deficit is
also reflected in the Union Budget, is something we will watch out for.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
http://www.kotaksecurities.com/pdf/dmb/MorningInsight15032012.pdf
RAILWAY BUDGET 2012-13
Focus on economic viability; uncertainty ahead
q The 2012-13 railway budget has focused on raising revenues and improving the operating ratio.
q With a view to increase revenues, passenger fares have been raised - the
first time after several years. Freight rates had been increased a few days
back and that too, steeply.
q Operating ratio, consequently, is expected to come down to 85% v/s
95% in FY12RE. The target is to reduce the same to 75% by 2016-17.
q Growth rates in freight loading and passenger traffic have been assumed
at a reasonable 5.6% and 5.4%, respectively. FY12 freight loading
growth was at about 5%.
q Economic viability, rather than social desirability, has been preferred.
q The Railway Minister has also proposed to set up Railway Tariff Regulatory Authority (RTRA) It would be a step towards delinking of Indian
Railways and Ministry of Rail to avoid conflict of interest, we believe.
q Railway modernization and safety will be targeted. Recommendations
made by expert committees to be adopted.
q Continued investments have been proposed towards additional railway
lines, doubling of lines, gauge conversion and electrification. Execution
to be important, in our view.
q Plan outlay is budgeted to rise to a record Rs.601bn.
q While the GBS is seen at Rs.240bn, internal accruals are expected to bring
in Rs.181bn.
q PPP is proposed to be encouraged; strategic initiatives outlined
q Overall, the budget is focused on controlling the deficit while continuing
investments to make railways one of the largest and best networks globally. It tries to align the annual targets with the Vision 2020 statement
of the railways and the 12th 5-year plan.
q However, implementation has to follow to make the proposals effective.
q Moreover, there is uncertainty whether the budget proposals will be
passed in the current form. We will watch out for the same.
q For the markets, it is largely a non-event. Whether the focus on deficit is
also reflected in the Union Budget, is something we will watch out for.
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