Shares of most railway companies gained after the consortiums led by Rail Vikas Nigam Ltd. and Bharat Heavy Electricals Ltd. won the contract to manufacture and maintain 200 Vande Bharat trainsets.
That has led Macquarie Research to assign an "underperform" rating to Bharat Heavy Electricals while maintaining an "outperform" rating on Siemens India. Rail Vikas Nigam, BEML, and Titagarh Wagons are not covered by the brokerage.
The Rail Vikas Nigam-led consortium, along with Russia's CJSC Transmashholding, emerged as the lowest or L1 bidder for trainset orders, at an estimated cost of Rs 12 crore per trainset. The second-lowest or L2 bidder was the consortium of state-run Bharat Heavy Electricals Ltd. and Titagarh Wagons Ltd., with an estimated cost of Rs 14 crore per trainset, according to a flash note by Macquarie Research.
The total order size of the 200 Vande Bharat trainset order is expected to be Rs 5,800 crore, with Rs 2,400–2,600 crore being the upfront amount split between the L1 and L2 bidders.
The lowest bidder will manufacture 120 trainsets, and the second-lowest bidder will manufacture 80 trainsets, but only if the second-lowest bidder can match the L1 bid's price, according to the tender documents.
Siemens India Ltd., in consortium with BEML Ltd., Alstom Transport India Ltd., and Medha Engineering Group, were the other bidders in this tender.
Shares of Rail Vikas Nigam, Titagarh Wagons, and Bharat Heavy Electricals advanced 13.42%, 7.14%, and 2.88%, respectively, after the project win.
Whereas, Siemens India declined 3.65% after failing to win the project.
Macquarie On Railway Stocks
Assigns an "underperform" rating to Bharat Heavy Electricals and maintains an "outperform" rating on Siemens India.
Rail Vikas Nigam, BHEL, and Titagarh Wagons are not rated by the brokerage.
Macquarie Research expects a 4% additional upside for Bharat Heavy Electricals, but it expressed a negative sentiment for Siemens.
The brokerage sees the L2 bid win as positive news for Bharat Heavy Electricals, with an upfront amount of Rs 480 crore that can be recognised over the next four to five years. This implies a 3-4% rise in revenue for FY25E.
Siemens, on the other hand, missed out on the 200 Vande Bharat trainset order and did not participate in the 100 aluminum body Vande Bharat trainset order.
Over the medium term, the margin profile of these orders will remain key, given aggressive bidding by players and heightened competitive intensity.
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