Full commissioning of Dedicated Freight Corridor could be a game changer for Railways; CCRI, GDPL top beneficiaries

Full commissioning of the Dedicated Freight Corridor (DFC) could be a game changer for Indian Railways, which has lost significant chunk of freight transport market share to road over the last 70 years. 

Railways losing freight transport market to roads over the last seven decades is attributed to multiple factors, including higher investments in road infrastructure, preference given to passenger trains over freight trains and high lead times over road transport. .  

"Faster, longer and more importantly, timetable scheduled trains will help railways win back its freight share. Partial commissioning is already yielding good results. In terms of freight traffic, Indian Railways (IR) has lost share to road over the last 70 years, says Equirus capital in its report.  

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As per the report, DFC commissioning will play a vital role in enhancing productivity of container terminal operators (CTOs) as it comes with multiple benefits such as higher axle loads, increased speed, longer trains and double stacking. "Lower costs and better transit time will make rail more competitive to roads," says the report.  

Stocks to benefit 

Reiterating that DFC is expected to be a game changer for Indian Railways, the brokerage house initiated a coverage on Container Corporation of India (CCRI) and Gateway Distriparks Limited (GDPL).  

It believes the government's Gati Shakti will also lead to a faster set up of multi-modal logistics parks across the country, which is expected to benefit CTOs. 

CCRI | Target Price: Rs 710 

Giving a long rating on Container Corporation of India, Equirus sees stock hitting a target price of Rs 710, which turns out to be 23% upside on its previous closing price of Rs 592.40 a share on the BSE. The target has been set for one-year t.e. till March 2023. 

Gateway Distriparks | Target Price 

At CMP of Rs 72 and target of Rs 90 in one year, this stock catering to transportation and logistics segment can see an upside of 26%. Assigning, long rating, the brokerage set the target for March 2023.  

Note: GDPL share stopped trading on 4thJan’22 and the last traded price was Rs 286. Post restructuring the number of shares will become 4x and the price will adjust accordingly. According to the management, shares trading will become in a few weeks’ time.