Page 73 - Nuvama | IC Report 2023

INDIA: THE 5D ADVANTAGE

But the ‘signal’ has changed to green again, and the IR is going full steam. It is in the midst of a
humongous wagon procurement plan—90,000 over the next three years for an estimated INR350bn.
The IR has already awarded orders for ~72,000 wagons worth ~INR284bn to major manufacturers.
Meanwhile, the National Rail Plan (NRP) has set a target to increase the modal share of the railways in
freight to 45% by 2030 (from 30% presently). To this end, the IR must haul more than 2,000MT freight
in 2024 and 3,600MT by 2031 (compared with 1,418MT in FY22).

75,000 Exhibit 4:
Surge in wagon
orders from Indian
60,000 Railways in FY23
Nos 45,000

30,000
15,000

0
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 (RE) YTD FY23*
Number of wagons purchased
Source: Government documents, Nuvama Research
Note: YTD FY23 order of ~72,000 wagons to be supplied over 39 months

Over the past decade, the IR has been increasingly moving towards high-power locomotives, keeping
in mind the increasing shift towards modern rolling stock. The NRP projects that IR must quadruple its
locomotive asset base by 2051 to handle the rising traffic requirements.
50000
Exhibit 5:
Locomotive
40000 requirement (as
per NRP)
(Nos.) 30000

20000

10000

0
2018 2026E 2031E 2041E 2051E

Number of locomotives required
Source: National railway plan; Nuvama research

Thus, the Railways’ ambitious plans would provide the much-needed foundation for manufacturing.

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