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Wagon makers set for 20% revenue growth this fiscal: CRISIL
Industry News- Sep 23,24
With order books standing at 2.3 times the revenue of wagon makers, the sector is expected to operate at 90% capacity this fiscal, up from less than 50% in fiscal 2021.
Wagon manufacturers supplying to Indian Railways are projected to see a 20% revenue growth this fiscal year, driven by increased operations and higher margins, according to CRISIL Ratings. The sector has benefited from a record order of over 90,000 wagons in the past two years, compared to an average of 10,000 wagons annually over the previous decade.
The government’s goal to boost rail transport's share to 45% by 2030 from the current 27% is also expected to sustain the order flow. Additionally, private sector demand, particularly from industries like steel, coal, cement, and automotive, is contributing to this growth, with companies leveraging the government's Liberalised Wagons Investment Scheme.
Rahul Guha, Director, CRISIL Ratings, noted that private sector orders typically come at a 10-15% premium, further boosting the industry's performance. With order books standing at 2.3 times the revenue of wagon makers, the sector is expected to operate at 90% capacity this fiscal, up from less than 50% in fiscal 2021.
Operating margins for wagon makers are expected to rise by 100 basis points to 12.5%, with companies expected to invest Rs 8-10 billion in capex, primarily for backward integration and expanding wagon manufacturing capacity.
(ET)
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