Meanwhile, another train part maker Titagarh Rail Systems rose nearly 3% to Rs 675 in today’s trade.
The contours of the PLI scheme will be worked out with the help of a consultancy firm, which will be selected through a bidding process this month, officials told ET.
The consultant will prepare a list of components that are largely imported and used in making engines and coaches, also called rolling stock.
Under the PLI programme, the government offers output-linked incentives for products that are usually imported.
The PLI scheme being considered for the railways is in line with the government’s plan of having only two types of passenger coaches in Indian Railways — Linke Hofmann Busch (LHB) and Vande Bharat — down from 28 at present.
The import component in LHB coaches, introduced in 1999, is around 1.5%, but in the Vande Bharat trains it is estimated to be about 15%.”The focus will be on assessing export potential of Vande Bharat trains and measures required to ensure localisation of components used in the train,” one of the officials cited earlier said.
Local manufacturing of components will also help in lowering the maintenance cost of these coaches.
“This PLI programme will incentivise setting up of new manufacturing units, or expanding existing ones to supply coach and engine parts that are otherwise imported,” the official said.
India continues to import critical components of rolling stock such as wheels and axles despite sustained demand from the railways.
To cut some of this import dependence, the railways recently awarded a procurement order for 1.54 million forged wheels that are manufactured in the country.
“The demand for Vande Bharat and LHB components is going to increase manifold in the country,” said another official. “There will be 4,500 VB trains running in the country by 2047.”
Both the stocks delivered multibagger returns to their investors, as in the last one year Titagarh Rail Systems surged nearly 400%, while it has rallied 1450% in the past three years. Whereas, Jupiter Wagons jumped over 350% in the past one year, while it has rallied over 2000% in the last three years.
As per Trendlyne data, the average target price of the Jupiter Wagons is Rs 213, which shows a downside of 22% from the current market prices. The consensus recommendation from one analyst for the stock is a ‘Strong Buy’.
Meanwhile, the average target price of the Titagarh Rail Systems is Rs 785, which shows an upside potential of 16% from the current market prices. The consensus recommendation from five analysts for the stock is a ‘Strong Buy’.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)