Shares of Ramkrishna Forgings, one of the leading suppliers of rolled, forged, and machined products, and Titagarh Rail Systems (formerly known as Titagarh Wagons) soar up to 8% in early trade on Friday after the consortium of the two companies secured a contract from the Ministry of Railways, Government of India.
The contract is to manufacture and supply 15,40,000 forged wheels over a span of 20 years. The contract will see the consortium delivering 40,000 forged wheels during the first year, 60,000 wheels in the second year, and 80,000 wheels every subsequent year thereafter, with the total contract valued at ₹12,226.5 crore, according to companies exchange filings.
The wheels manufactured under this agreement will cater to the requirements of multiple platforms, such as the LHB coaches, WAG9 locomotives, Vande Bharat Express Trains, etc.
"The RKFL-TRSL consortium will be establishing a state-of-the-art manufacturing facility to manufacture these forged wheels, with total annual production targeted at 2,00,000 wheels when fully operational."
“Not only will this facility address the demands of the domestic railway sector, but it will also help the consortium address the latent demand from the private sector as well as export markets,” the filings said.
The successful execution of this project will require a capital expenditure ranging from ₹1,000 to ₹1,200 crore. To meet this financial requirement, both companies will contribute equity on an equal basis, ensuring a robust funding structure to support the project's capital expenditure needs, as per the filings.
In response to the positive development, shares of RK Forgings opened strongly at ₹435 apiece as against the previous closing price of ₹408.40, and they strengthened further in the early trade to mark a new record high of ₹439.90 apiece, up by 7.7%.
Similarly, Titagarh Rail Systems shares also rallied 3.36% to record a new life-time high of ₹430 apiece in Friday's trade.
Meanwhile, RK Forgings on Thursday said it received an order to supply undercarriage parts to a renowned European railway passenger coach manufacturer. The contract is valued at 4.5 million euros and is set to be fulfilled within a span of two years.
“This order is from a prominent European railway passenger coach manufacturer and is a testament to the company's dedication to excellence in the field of fabrication,” the company said in a regulatory filing.
“The successful acquisition of this order not only signifies the trust placed in the company’s capabilities but also serves as a significant boost to revenues from the fabrication vertical. The order will also create additional opportunities for the company to expand its footprint in the European Railway,” the company added.
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