Login

Lost your password?
Don't have an account? Sign Up

Mumbai-Delhi Dedicated Freight Corridor Could Favour Concor, says Nomura

Share This News Story:

NEW DELHI : Container Corp. of India Ltd. stands to benefit from the commissioning of the Western Dedicated Freight Corridor and its linkage with ports in Gujarat for the movement of goods, according to Nomura. Nomura is a global financial services group involved in Global market research with an integrated network spanning over 30 countries.

Between FY15-20, Concor invested heavily in infrastructure and rolling stocks, in anticipation of benefiting from the Western DFC, Nomura said in a recent report. The investments have led to a strong network of terminals along the Western DFC route, with key private freight terminals connected to the WDFC, the agency said.

“Concor will be a bigger beneficiary of the road-to-rail shift from FY22-26, as it manages to capitalise on WDFC through the investments it had made in private freight terminals and rolling stock over the years,” the agency said.

The Western DFC is a broad-gauge corridor under construction that will connect Dadri near Delhi and Mumbai and increase the speed of freight movement by separating freight and passenger traffic.

According to Nomura, the weak state of India’s inland logistics, especially the highly congested rail network, leads to roadways being the dominant mode of transport despite higher costs and significantly higher emissions. “Rail transport is 40-50% less expensive than road. Yet, due to congestion on rail networks, roads dominate (74% market share in FY20) the logistics mix.”

Nomura expects the Western corridor to increase the share of railways to 35% by FY26 from 26% currently, leading to lower logistics costs and better competitiveness for Indian manufacturing. It can also help eliminate a significant amount of carbon emissions by displacing diesel-operated trucks with electrified rail transport.

While Concor has built up assets along the Western DFC, they remain underutilised due to delays in commissioning of the project and several missed timelines. This had also led to the company’s return-on-equity to shrink, Nomura said.

However, the western corridor offers linkages to private rail sidings for major cement makers. And if that supply is “containerised”, then Concor’s domestic volumes along the corridor can witness strong growth, Nomura said.

“In case of Concor successfully developing large-scale freight transport for cement through containers, we think CCRI may witness a significant surge in domestic volumes as well,” it said.

Besides, Concor has also started time-tabled train services to key ports including Mundra, Pipavav and Jawaharlal Nehru Port. “This should enable Concor to provide more accurate time guarantees,” it said. “This, in our view, will be a strong volume growth driver and reason for market share gain for Concor from FY22F to FY26F.”

Source : Bloomberg Quint

close

Receive our Latest Newsletters by Email

We’d love to keep you updated with our daily latest news stories.

We don’t spam! Your Privacy is Our Policy.

Share This News Story: