L&T, Voltas get 'overweight' while 'underweight' ratings on siemens, ABB shares: Barclays

Mar 24 2014, 09:32 IST
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SummaryMajor players to benefit from transport projects

Urbanisation in India is accelerating. With urbanisation comes increased spend on transport infrastructure and we see this emerging as a multi-year capex theme. Larsen & Toubro (Overweight) appears most levered to this theme given its experience in executing metro/ mono rail projects, while other likely beneficiaries could include HVAC (heating, ventilation, and air conditioning) vendor Voltas (OW) and electrification vendors such as Siemens (Underweight) and ABB (UW).

Urbanisation driving infrastructure spending: Increasing urbanisation is pushing up vehicle sales amid constraints on increasing road density. Our assessment of 35 major cities in India on various socioeconomic parameters suggests that mass transit rail systems should be a high priority in 12 cities with bus rapid transit systems (BRTS) implemented as feeder services.

We estimate that India needs more than 2,500km of metro rail by 2031 and 5,500km of network for BRTS. These metro lines should be integrated with other transport modes, with monorail and BRTS serving as feeders. Thus, we envisage investments of $120 bn in metro rail and $20 bn in BRTS until FY30.

As per the 2011 census of India, 53 urban agglomerations in India have a population of more than one million, with Delhi, Greater Mumbai, Kolkata, Chennai and Bengaluru having the largest population. There are 160m people living in these 53 urban agglomerations. In the next two decades, the number of million-plus population urban agglomerations is expected to increase to 65 (215m population) by 2021. As per the 2011 census there are 19 urban agglomerations in India that have a population of more than 2m and almost all of them have a plan to build a metro network.

Monorail--a feeder for the larger networks: A monorail transit system is being constructed at some places in India, instead of a metro as monorails need less land and are suitable for narrow areas where there are lots of changes in alignment. However, in comparison to metro rails, they are slower and have less carrying capacity. More than 15 projects have been announced till now with most of them currently in the planning stage.

Mumbai monorail project: The project was approved in 2008, to serve as a feeder to the metro railways from the crowded and narrow areas. The project was won by a consortium of L&T and Scomi Engineering, Malaysia. The Rs24.6bn project involves 20km of line from Jacob Circle to Chembaur via Wadala. The first phase of the monorail of length 8.2km from Wadala

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