I am going to go, bit off the rails (pardon the pun) and say the sector I see, which could make big waves is Railways.
Why Railways & Why now ? Railways been a sector which has been lacking in infrastructure foe decades but there has been recent push to get them up to speed. Also, Government’s disinvestment policy mean that many Railway miniratna have now come up (coming) with IPO in recent past.
A look at the sector offering.
- IRCON - Turkey construction of railway lines, station, elec substation etc (least interesting in this space)
- RVNL - Engineering services but has a possible gold mine in HSRC (High Speed Rail Corporation of India Ltd) as its subsidiary
- RITES - Railway Project Management Consultancy
- IRCTC - Internet Booking Engine, Catering & now another potential gold mine in running private premium trains
- IRFC (readied for potential IPO) - Railway Finance corp, who is the banker for the projects
- RailTel (readied for potential IPO) - Telecom,Network, Wifi, Cloud , Data Center with Licensing model
- BEML - though not technically railways but a PSU which caters for Metro rolling stocks & rail equipments…
Biggest advantages of this sector play is,
- Mostly monopoly. Even if there are competitors, they are the preferred operator by Government by signing MoU with Railway ministry
- No impact from Macros - oil, liquidity crisis - largely no impact here
- Most of these are profitable, no debt , high cash companies - which also means good dividends
Only thing to look at is, is Govt pushing for railway based infra - answer currently is resounding yes. Whether its Metros or Freight Corridor or High speed rail or Private trains or even talk of bullet trains in future.
Recent listings have come in very good valuations for the investors. Only risks in all these is the Government willingness or unwillingness to invest in the projects. Atleast going by the projects sanctioned whether its metros or DFCs or high speed rail, the sector has a positive outlook.
Disc : I am already on the train of RITES since its IPO, Tracking RVNL, Subscribed to IRCTC