Buy Texmaco for Long Term
Investments with a long-term perspective can be considered in the stock of Texmaco, a leading supplier of wagons to the Indian Railways.
The substantial pick up in demand for wagons, setting up of dedicated freight corridors, allowance of private sector participation in rail logistics and introduction of wagon leasing scheme by the Railways all point to strong prospects for Texmaco. At the current market price of Rs 1,315, the stock trades at about 18 times its likely FY09 per share earnings. This appears justified by the company’s diverse business mix and strong earnings visibility. Investors can accumulate the stock in phases given the volatility in the broad markets.
The demand for wagons is likely to pick up considerably in the near future given the latest rail budget, which aims to procure an all-time high of about 20,000 wagons this year. This apart, demand is also likely to get a boost from the entry of private players in rail logistics.
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