Budget 2023: Railways, water and power transmission likely to be key the focus for FM

Indian Railways takes up about 15 percent of the capital expenditure by the Government in the Union Budget, Amit Anwani, research analyst at Prabhudas Lilladher, pointed out. He believes that the upcoming Budget would include a 12-15 percent YoY rise in railway-related capex. The broader focus of the government would be on revamping the rail network, rail electrification, station redevelopment, and Vande Bharat trains, he added.

Catch up on all LIVE stock market coverage for the day here.

Even urban infrastructure is expected to be in focus, market participants said.

Recently, Siemens signed a contract for a Rs 26,000-crore order from Indian Railways to design, manufacture, commission and test 1,200 locomotives. And Rail Vikas Nigam recently bagged two metro rail projects from Gujarat Metro Rail Corp.

The recent contracts reflect the decent order inflow in the segment, market participants said.

Also Read | Budget 2023: No big-bang announcements expected for metals

Jal Jeevan Mission

The Jal Jeevan Mission is a central government initiative under the Ministry of Jal Shakti, which aims to ensure access to piped water for every household in India. The mission’s goal is to provide safe and adequate water to all households in rural India through individual household tap connections by 2024.

The expectation is that the government will continue to focus on the Jal Jeevan Mission even in this Budget. Anwani sees a 10 percent increase in water capex by the government this year.

Among corporates in the listed space, Larsen & Toubro (L&T) has been securing orders for sewage and water treatment plants, which hints at the order inflow momentum, Anwani said.

Also Read | Budget 2023: Expect higher outlays for infrastructure sectors

Power Transmission

“Power transmission is another area that we are bullish about,” said Biswas.

Transmission ordering was weak for the last five-six years but he now sees an uptick in the ordering activity in the transmission space.

“We should see that uptick. In fact, many companies are already kind of seeing order inflows coming through and we expect this trend to continue for some time, at least for the next few years,” he added.

Further, he said the margins of these transmission companies might also improve as commodities also start correcting from YoY levels.

Anwani expects the government to focus more on the green energy corridor, smart metering, and power transmission network improvement, among other things. Power transmission constitutes 12 percent of the Budget, and he believes it will grow more this year.

The government has recently announced a 500 gigawatt integration roadmap as well, which indicates the possibility of an uptick in this space.

Biswas also pointed out that plays on railway safety and signalling are definitely worth looking at.