Kernex Micro bags Rs 2,041 crore government contract for KAVACH equipment

Kernex has stated that the KAVACH system is a Rs 35,000 crore opportunity, with 'significant' awards to continue for next 5 years.

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Railway systems and software services company Kernex Micro has bagged a major contract worth Rs 2,041 crore from the government for KAVACH equipment, the company informed stock exchanges on December 10.

The company has a market capitalisation of Rs 2,100 crore.

The work order has been issued by Chittaranjan Locomotive Works (CLW), a Railways production unit, located in Chittaranjan, West Bengal.

"...order involves the supply, installation, testing, and commissioning of 2,500 sets of On-board KAVACH equipment, in line with RDSO Specification...", said the statement by Kernex Mico Systems. The project will advance railway safety and modernization and is slated to be completed in 12 months.

Shares of Kernex Micro were locked on 5% upper circuit in the session on December 10, and are higher by 115% on a YTD basis.

The company has a production capacity of 100 KAVACH units per month, which it says it can scale up to 250 units per month. Kernex has stated that the KAVACH system is a Rs 35,000 crore opportunity, with 'significant' awards to continue for next 5 years. Centre has plans to install the anti-collison system on all locomotives, including Vande Bharats. The company has plans to diversify revenue from non-KAVACH contracts, even as it had previously projected KAVACH revenue to double in FY26.

KAVACH is a Train Collision Avoidance System (TCAS) or Automatic Train Protection System (IRATPS), and offers safety solution to prevent train collisions.

As part of the next phase of Kavach implementation, project for equipping 10,000 locomotives has been finalised, Railway Minister Ashwini Vaishnaw told the Parliament on November 27. "The funds utilised on Kavach works so far is Rs 1,547 crore. The allocation of funds during the year 2024-25 is Rs 1,112.57 crore," he added.

The Indian Railways has already floated tenders worth Rs 2,700 crore in August for the installation of thr KAVACH system, multiple officials aware of the development have told Moneycontrol.