Railway stocks buck the trend, here's why realty will follow

On a day when almost all sectors are trading in red, companies related to the railways are bucking the trend. The reason for this is because the Railways have selected a Japanese consortium to explore the possibility of running a bullet train on the Hyderabad-Chennai high speed rail corridor. This follows a report which said that Railways was in the process of constituting the National High Speed Rail Authority (NHSRA) on the lines of the National Highways Authority.

Reacting to this news almost all stocks catering to Railways demand have moved higher. Kalindee Rail has moved up by 7 percent to Rs 111.50, Kernex is also trading 7 percent higher at Rs 71.10 while Texmaco Rail is up 4.5 percent at Rs 74.

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Reports say that Japan External Trade Organisaton and Oriental Consultancy along with Parsons Brinkhoff has bagged the contract to conduct the pre-feasibility study on the proposed 664 km long Hyderabad-Vijaywada-Chennai route for running the high speed train. Railways had already selected consultants to carry out studies for three routes which are Pune-Mumbai-Ahmedabad (650 km) route, Delhi-Agra-Lucknow-Varanasi-Patna (991 km) route and Howrah-Haldia (135 km) route. Apart from this selection of consultants for Delhi-Amritsar (450 km) and Chennai-Bangalore-Coimbatore-Thiruvananthapuram (869 km) route are in the process of being decided shortly.

In order to expedite these multiple projects NHSRA is being set up, approval for which is expected in the Budget Session.

Estimates say it will cost around Rs 100 crore to construct a one km dedicated high speed corridor. The current projects being considered thus opens a window of Rs 3,75,900 crore. It is in anticipation of capitalising on this opportunity that railway counters are on the move.

Studies have proved that faster connectivity helps in faster growth of satellite cities along the route. Though railway stocks are the only ones who have reacted to the news, once the actual roll out starts, real estate and related companies will also reap the benefit.

A fast-growing country needs transportation. Railways already runs around 64,000 kilometers of rail network in the country, but around 85 percent of this network has been set up by Britishers. With over 10 billion people using the current railway network and 1,050 million tonnes of goods being transported across the country using this network, railways forms an important and faster substitute to road network.