Construction - Dedicated Freight Corridor: Back on Track; Sector Update :: Edelweiss, link

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India`s most ambitious infrastructure project, the Dedicated Freight Corridor (DFC), is gathering steam once again after a lull of almost a year and a half-2 contracts cumulatively worth ~INR77bn have been awarded recently. In addition, the pre-qualification process is already underway for award of multiple contracts on Eastern and Western corridors. In our view, the award pipeline gathering pace will be a boon for contractors. We perceive EPC contractors like Larsen & Toubro (L&T), NCC, HCC and Simplex to be near-term beneficiaries. 

After the break: Award activity gathering steam

DFC project award had been muted since the award of 3 major contracts worth ~INR100bn in H1CY13. However, 2 major tenders-INR26bn electrification contract for 915km section of the Western DFC (won by L&T-Sojitz) and ~INR51bn contract for civil, structural and track work for 417km section of Eastern DFC (won by GMR-led consortium)-have been awarded recently. We believe the resumption of award activity dispels concerns about the purported slow progress of the DFC project.

Robust tendering pipeline portends windfall gains for contractors

Moreover, the ball has already been set rolling for pre-qualification process to award multiple contracts on both Eastern and Western corridors. Civil construction contracts to be awarded will include the Khurja-Ludhiana section (447km) on Eastern DFC, while on the Western DFC, projects for the Iqbalgarh-Vadodara (297km), JNPT-Vaitarana (102km) and Vaitarana-Vadodara (320km) sections will be awarded. In our estimate, the overall size of these tenders could be ~INR120-140bn. On the systems front, contracts for JNPT-Vadodara (422km) on the Western corridor and Khurja-Kanpur (343 km) and Kanpur-Mughalsarai (393km) section on the Eastern corridor will be awarded. These could spell a ~INR35-40bn windfall for contractors.

LINK
https://www.edelweiss.in/research/Construction--Dedicated-Freight-Corridor-Back-on-Track;-Sector-Update/27695.html