Construction - Sector - Report May 19 EDEL PDF

Metro Rail
Buckle up for a Metrolution

May 6, 2019
Daylight Again
Parvez Akhtar Qazi Aditya Chandrasekar

+91 22 4063 5405 +91 22 6623 3404 Edelweiss Securities Limited
parvez.qazi@edelweissfin.com aditya.chandrasekar@edelweissfin.com
Infrastructure - Construction
Metro Rail – Buckle up for a Metrolution

Rapid urbanisation and low share of public transport have exacted a heavy
toll on major cities in India—it holds the dubious distinction of being home
to 22 of the top 30 most polluted cities in the world. To ameliorate this
situation, the government has rolled out metro rail network at a dizzying
speed in the country. With 13 operational projects, India has already
overtaken the US and is now only behind China in terms of operational
metros. And, with projects under construction in 14 cities (including
brownfield expansion in 10) and in various stages of planning in seven
other, India truly is witnessing a Metrolution (metro revolution). Our deep
dive analysis forecasts metro projects to generate a whopping
~INR2,500bn orders spanning civil construction, rolling stock and systems
works over the next five years. This metro boom will significantly benefit
L&T, NCC, J Kumar, ITD Cementation, Siemens, ABB and BEML. Buckle up
as we take you through the when, where and how this boom will unfold.
Metro rail: Panacea for urban traffic woes

Urbanisation, coupled with rising private vehicle ownership due to lack of quality public
transport options in urban areas (abysmally low at 30%), has resulted in significant
jump in traffic congestion. This not only leads to productivity loss and fuel was tage, but
also spurs pollution. To curb this menace, rapid transit systems such as metro rail have
emerged as the primary choice of urban planners. The runaway success of Delhi Metro
(900mn plus annual ridership in FY18) has unleashed a Metrolution in Indi a. With metro
projects operational in 13 cities, it now lags only China in the world as far as the
number of operational metro projects, are concerned.
Metro rail boom to generate ~INR2,500bn orders over FY20-24E

Our detailed analysis of India’s metro ecosystem indicates huge potential opportunity.
Metro rail works (including brownfield expansion) will be carried out in 20 plus cities in
India over the next five years at an investment of ~INR3,600bn. This is estimated to
generate whopping ~INR2,500bn orders in civil construction, rolling stock and systems.
We estimate EPC contractors to bag a lion’s share of this (~INR1,512bn). While foreign
players have won most of the rolling stock and systems contracts in the past, we
believe government’s ‘Make in India’ initiative will now favour local content.
Consequently, players with technology prowess and a track record of innovation as well
as efficiency will benefit handsomely (refer to, Engineering & Capital Goods –
DIGITRIALISATION: Opportunities amid disruption).
Outlook: Steaming ahead at full throttle

Metro systems are under construction in 14 cities and in various stages of planning in
seven cities. In addition, projects have been proposed and are at conceptual stage in
multiple other cities. Thus, as more cities join the metro bandwagon, we envisage
investments in this space to rise exponentially. Likely beneficiaries include L&T
(BUY/SO), NCC (BUY), J Kumar (Under Review), Texmaco Rail (BUY) and ITD
Cementation (Not Rated) in construction; Siemens (BUY/SO) and ABB (HOLD/SP) for
systems contracts; Titagarh Wagons (BUY) and BEML (Not Rated) for rolling stock work.
1 Edelweiss Securities Limited

The need for public transport in India
Rising urbanisation
India’s urban population, which was ~29% as per 2001 census, had crossed the 31% mark by
the time of 2011 census. In 2017, it had surged to 34%, according to the World Bank.
According to a UN survey, by 2030, ~41% of India’s population will reside in urban areas.
While the number of cities with population of over 10mn is expected to increase from two
(Mumbai and Delhi) in 2011 to eight by 2035, the number of cities with a population of over
India’s urban population is 1mn is expected to jump from 59 in 2015 to 78 by 2035.
surging and so is the vehicular
ownership in the country India, along with China, Indonesia, Nigeria, and the US, will lead the world's urban
population surge by 2050. By 2030, urban areas are likely to contribute ~70% to India’s GDP.
Such a sharp rise will exert more pressure on the already overburdened infrastructure.
High vehicle ownership and low share of public transport

Government data indicates that the total number of registered cars per 1,000 population
has catapulted from ~5 in 2001 to ~20 in 2015. This number (currently ~22) is expected to
jump 8x to 175 by 2040.
Similarly, the number of registered two wheelers per 1,000 population has surged from ~37
in 2001 to ~127 in 2015, and is expected to continue growing at a similar pace.
Chart 1: Vehicle ownership (cars and two wheelers) per 1,000 population
160
Vehicle ownership
130
100
70
40
10
2001
2002
2003
2004
2005
2006
2010
2011
2012
2013
2014
2015
2007
2008
2009
Vehicle ownership per 1000 population
Source: Government documents, Edelweiss research
The main reason for such a significant rise in private vehicles is the lack of quality public
transport options in urban areas. The share of public transport in overall urban transport in
India is at an abysmally low of 30%.

Sector Update
Chart 2: Share of public transport across countries

100
Share in transport (%)

80
60
40
20
South Korea
Western
Russia
China
Singapore
UAE
India
Japan
USA
Europe
Other Car Public Transportation Demand-driven modes
Source: Industry data, Edelweiss research
While this is higher than developed countries/regions such as US, Western Europe and UAE
Share of public transport in India (where personal vehicle ownership per capita is much higher), it is lower than peers like
is much below the desired levels Singapore, South Korea, China, Russia and Japan.
The Ministry of Urban Development has published a desirable share of public transport for
different categories of cities based on population. As per the same, the current share of
public transport, i.e. 30%, is significantly lower than the desirable share. This shows that
there is an urgent need to scale up the public transport infrastructure in major cities.
Table 1: Desirable share of public transport (%)

Share of modes of transport (%)
City population (mn) Mass transport Bicycle Other modes
0.1-0.5 30-40 30-40 25-35
0.5-1.0 40-50 25-35 20-30
1.0-2.0 50-60 20-30 15-25
2.0-5.0 60-70 15-25 10-20
5.0+ 70-85 15-20 10-15
Source: Ministry of Urban Development, Government of India. Traffic and Transportation Policies
and Strategies in Urban Areas in India, 1998
Increasing congestion in all major cities

Major Indian cities are now consistently ranked amongst the world’s most congested cities.
Average speed of vehicles in Bengaluru is 17km/h. The offpeak speed for 13 arterial roads in
Delhi has been recorded at 27km/h, 50-60% lower than the design speed.
Increasing number of vehicles is This is not just a matter of inconvenience; these high levels of congestion have huge costs
leading to traffic congestion in attached in the form of reduced productivity, fuel waste and accidents. As an example,
Indian cities, leading to reduced recent estimates from the Bengaluru Development Authority, released as part of Master
productivity, fuel waste and Plan 2031, suggests that 11.8mn citizens waste 600mn person-hours annually and almost
accidents ~0.28mn litres of fuel is wasted per hour in Bengaluru city because of congestion.
Government data indicates that the combined costs due to congestion for the four cities of
Delhi, Mumbai, Kolkata and Bengaluru are over USD22bn annually.

In Delhi alone, congestion was estimated to cost the city USD10bn annually. This congestion
also manifests in the form of logistics and freight inefficiency. A recent study estimated huge
loss of ~USD21bn annually in these top four cities on account of delays and additional fuel
consumption due to poor road conditions and frequent halts.
Chart 3: Annual cost of congestion in Indian metros

12.5
Cost of congestion (USD bn)

10.0
7.5
5.0
2.5
0.0
Delhi Bengaluru Mumbai Kolkata
Avoidable social cost of congestion (USD bn)

Transport is a major contributor to pollution

Major Indian cities are afflicted with high levels of air pollution causing major health
problems including asthma, tuberculosis, lung infections and skin infections.
India has some of the most
According to a recent study by Greenpeace and Air Visual, 22 of the top 30 most polluted
polluted cities in the world;
cities in the world were found to be in India. Gurugram, a suburb of New Delhi, was
increasing traffic is a major
identified as the world's most polluted city, with average air quality index of 135.8 in 2018---
source of air pollution in these
cities almost 3x the level which the US Environmental Protection Agency regards as healthy.
It is estimated that the transport sector contributes ~14% of the overall air pollution in India.
Chart 4: Sources of air pollution in India

Domestic
Industries cooking
8% 7%
Diesel generator
9% Dust and
construction
45%
Transport
14%
Waste burning
17%

Sector Update
According to scientific studies, at lower speeds due to growing congestion, vehicles burn
fuel inefficiently and pollute more per trip. For example, at average trip speeds between 5
and 20km/hr, which is the range of vehicle speeds in major Indian cities, cars pollutant
emissions were 4-8x as much as when the average speed was 55-70km/hr.
Various studies estimate that the use of public transportation can result in 90–95%
reduction in CO, VOCs and 50% reduction in CO2 and NOX emissions compared to private
vehicles.
The way forward

It is thus imperative to address urban mobility issues to ease the traffic gridlock which
currently plagues most major Indian cities. In this backdrop, mass rapid transit services
(MRTS), commonly known as metro systems, have caught the fancy of urban planners, due
to the following reasons:
Investing in metro rail projects is  Despite being capital intensive, metro projects provide fast, reliable and comfortable
imperative to tackle the problem transport services for commuters.
of urban congestion; these
 These systems use only one-fifth energy per passenger-km compared to a road-based
systems also help conserve fuel
system.
and are efficient in usage of
urban space  Most major Indian cities face significant shortages in urban space; in this context, metro
projects are highly efficient in usage of urban space as one rail line equals seven bus
lanes or 24 car lanes.
 There is increasing competition for investments between states, whereby states seek
opportunities to attract investments within their territory often via infrastructure
development. Therefore, states are eager to develop metro projects in their major
cities.
 On a softer aspect, metro systems are also perceived as a modern and new-age means
of transport compared to other public transit systems such as bus rapid transit, etc.
Over the past few years, multiple Indian cities have joined the metro bandwagon. As on
date, there are 13 operational metro systems in the country, which places it second in the
ranking of countries in the world on the basis of the number of operational metro systems.
Chart 5: Countries with the most number of operational metro systems

40
Operational metro systems
India has the second largest 32

number of cities with operational
metro systems (only behind 24
China) in the world
16
0
South Korea
China
India
US
Turkey
Germany
France
Japan
Russia
Brazil
Italy
Iran
Number of operational metro systems


Institutional framework
While transportation is a state subject under the Indian constitution, urban transport has
not been defined as a separate subject. Instead, the allocation of subjects between central
and state list is mode-wise. However, as urban transport is closely linked to urban
development, urban transportation is primarily a state subject.
Both central and state
governments play their part in On the other hand, “Metro railway” is a “railway” as per List I, Entry 22 of the Constitution;
developing metro rail projects accordingly, metro rail projects are to be implemented as central sector projects.
Thus, due to the unique nature of metro projects, participation of both central and state
governments becomes crucial to ensure successful implementation of metro projects. In
order to clearly specify the responsibilities of individual shareholders as well as to limit
liabilities of shareholders, generally, a shareholder agreement is signed.
Metro Rail Policy 2017

The Union Cabinet in August 2017 approved the new Metro Rail Policy 2017. Key highlights
of the policy are:
 The policy seeks to ensure that the least cost mass transit mode is selected for public
transport by mandating alternate analysis, requiring evaluation of other modes of mass
transit like BRTS (Bus Rapid Transit System), Light Rail Transit, Tramways, Metro Rail and
Regional Rail in terms of demand, capacity, cost and ease of implementation.
Metro Rail Policy 2017 lays  The new policy provides for rigorous assessment of new metro proposals and proposes an
emphasis on rigorous assessment independent third-party assessment by government identified agencies.
of new metro proposals and use of  Taking note of substantial social, economic and environmental gains of metro projects,
the PPP mode the policy stipulates a shift from the existing Financial Internal Rate of Return (FIRR) of 8%
to Economic Internal Rate of Return (EIRR) of 14% for approving metro projects, in line
with global practices.
 Private participation, either for complete provision of metro rail or for some unbundled
components (like automatic fare collection, operation & maintenance of services etc),
must form an essential requirement of all metro rail projects seeking central financial
assistance. State governments should mandatorily explore the possibility of having a PPP
arrangement.
 The policy requires state governments to mandatorily explore the possibility of having a
PPP arrangement. However, in our opinion, the high capital costs and the need to keep
fares affordable limit the viability of metro projects for private developers. This is why
only a few projects have been awarded on PPP basis so far (Mumbai Metro Line 1,
Hyderabad Metro, Pune Metro Line 3, etc). Therefore, we believe, that a majority of
contracts will continue to be publicly funded.
 The policy states that the various options for central financial assistance are as below:
o Public Private Partnership (PPP): Central financing for this model will be governed
by the Viability Gap Funding (VGF) scheme of the government.
o Grant by the Central Government: Central government will consider providing a
grant of 10% of project cost, excluding private investment, cost of land,
rehabilitation & resettlement and tax, to the state government for the
construction of a metro rail project. However, public-private partnership in some
form for implementation, operation & maintenance, fare collection or any other

Sector Update
unbundled activities of the proposed metro rail project, wherever feasible, will be
required.
o Equity Sharing Model: In this model, projects will be taken up under equal
ownership of the Centre and the state government concerned through equal
sharing of equity. PPP in some form for implementation, operation & maintenance,
fare collection or any other unbundled activities of the proposed metro rail project,
wherever feasible, will be required. Government of India will provide financial
support to metro rail projects in the form of equity and subordinate debt (for part
of taxes), subject to an overall ceiling of 20% of the cost of the project excluding
private investment, cost of land, rehabilitation and resettlement.
 Seeking to ensure financial viability of metro projects, the new Metro Rail Policy requires
states to clearly indicate in the project report the measures to be taken for
commercial/property development at stations and on other urban land and for other
means of maximum non-fare revenue generation through advertisements, lease of space
etc., backed by statutory support.
Metro Rail Policy 2017 has  The earlier requirement of a minimum population of 2mn for a city to be considered for a
relaxed the earlier provision of metro rail project has been relaxed. The new policy now states that the requirement of a
requirement of a minimum metro system will depend on the spatial pattern of the city. Cities with a well spread out
population of 2mn for a city to be spatial pattern, even if they have a high population, may not have sufficient number of
considered for a metro rail project corridors with adequate density to justify investments in a metro. On the other hand,
cities with a linear spatial pattern may justify a metro even at lower population levels as
they have fewer corridors and each would have a high traffic density.
 Setting up of Urban Metropolitan Transport Authority (UMTA) has been made
mandatory. This authority is to prepare ‘Comprehensive Mobility Plans’ for cities for
ensuring complete multi-modal integration for optimal utilisation of capacities.
 In order to improve the last mile connectivity, the new policy seeks to focus on a
catchment area of 5km on either side of metro stations requiring states to commit to
provide necessary last mile connectivity through feeder services.
Recent developments on the policy front

The Ministry of Housing and Urban Affairs has recently prepared a Draft National Urban Policy
Framework (NUPF) which outlines an integrated and coherent approach towards the future of
urban planning in India. The ministry has invited comments on this draft document. The
section of this policy that deals with urban transit has the following key highlights:
 The provision of public transport will be subsidised by the Center.
 Last mile connectivity and creation of infrastructure for safe commute of pedestrians and
cyclists must be focussed upon.
 An overarching Unified Metropolitan Transport Authority (UMTA) must be created across
all cities and towns with multiple modes of public transports to ensure that different
public transport agencies do not work in silo.
 All future airports, buses, trains and metro stations should be designed in a way to ensure
seamless transit for commuters switching modes.
 Fiscal measures should be taken to discourage private vehicle purchase and usage in
terms of higher motor vehicle and fuel taxes. The revenue gained from increased taxation
should be used to fund public transport. On-street parking should be priced at a rate high,
enough to discourage casual private vehicle trips. This revenue can further be used to
fund public transport.

Status of metro projects in India
Metro projects in India have generally been undertaken in phases, keeping in mind the huge
investments involved and specific requirements of a network. Even within a particular
phase, more than one line has been constructed, depending upon the need for passenger
connectivity. To this extent, most cities have a dynamic metro network with some phases
already operational and others, either under construction or at planning stages.
The first MRTS project in India was the Kolkata Metro, the master plan for which was
prepared in 1971. While the project’s foundation stone was laid down on December 29,
The success of Delhi Metro has 1972, actual construction of Line 1 began only in 1978. The project started commercial
paved the way for metro rail services in 1984.
revolution in India
The second metro project was the Chennai MRTS, which was planned in the 1970s and
1980s, but taken up for implementation by the railways in 1983–84. The project opened in
1995 and was extended twice in 2004 and 2007.
However, the turning point for MRTS in India came with the Delhi Metro. While planning for
the project had started in 1984, Delhi Metro Rail Corporation (DMRC) was registered under
the Companies Act, 1956, only in May 1995. Construction began in 1998 and first section
became operational in 2002. Currently, Phases I, II and III are operational with Phase IV on
the cards. Currently, Delhi Metro is amongst the top 10 in the world as far as network length
is concerned; its annual ridership was 900mn plus in FY18.
The current status of metro projects in various cities is given below:
Table 2: Status of metro projects in India

Status City
Operational Ahmedabad, Bengaluru, Chennai, Delhi, Gurugram,
Hyderabad, Jaipur, Kochi, Kolkata, Lucknow, Mumbai, Nagpur,
Noida
Under construction Ahmedabad, Bengaluru, Bhopal, Chennai, Delhi, Hyderabad,
Indore, Jaipur, Kochi, Kolkata, Mumbai, Nagpur, Navi
Mumbai, Pune
Planning stage Prayagraj, Agra, Guwahati, Kanpur, Meerut, Patna, Surat
Concept stage Gorakhpur, Nashik, Vijaywada, Vizag

Sector Update
Chart 6: Delhi has the largest operational metro rail network in India
400
320
Length (km)
240
160
80
Lucknow
Gurugram
Chennai
Kochi
Hyderabad
Bengaluru
Ahmedabad
Mumbai
Delhi/NCR
Jaipur
Kolkata
Noida
Nagpur
Operational metro projects in India
While Delhi boasts of the largest
operational metro rail network in Chart 7: Mumbai has the largest under construction metro rail network in India
the country, Mumbai has the 180
maximum length of metro
144
network under construction
Length (km)
108
72
36
Chennai
Kochi
Hyderabad
Bengaluru
Ahmedabad
Delhi/NCR
Mumbai
Pune
Indore
Jaipur
Kolkata
Bhopal
Nagpur
Navi Mumbai
Under construction metro projects in India


Table 3: Status of metro projects across various cities

Particulars Phases Length (km) Project cost (INR bn) Status Time lines *
Delhi Ph I 65 106 Operational Start - 1998; Completed in 2005
Ph II 125 188 Operational Start - 2006; Completed in 2011
Ph III 160 411 Partly Operational Start - 2011; Expected completion - 2020
Ph IV 105 468 Planning stage
Airport Metro ** 23 57 Operational Start - 2007; Completed in 2011
Mumbai Line 1 11 43 Operational Start - 2008; Completed in 2014
Line 2A 19 64 Under Construction Start - 2016; Expected completion - 2020
Line 2B 24 110 Under Construction Start - 2018; Expected Completion - 2021
Line 3 34 300 Under Construction Start - 2016; Expected completion - 2022
Line 4 35 155 Awarded Start - 2018; Expected Completion - 2022
Line 5 25 84 Approved
Line 6 15 67 Awarding started
Line 7 16 62 Under Construction Start - 2016; Expected completion - 2020
Line 8 35 150 Concept Stage
Line 9 14 65 Approved
Navi Mumbai Ph I 11 31 Under Construction Start - 2011; Expected completion - 2020
Ph II 10 40 Concept stage
Ph III 2 6 Concept stage
Pune Ph I 31 123 Under Construction Expected completion - 2022
Ph II 23 83 Awarded
Bengaluru Ph I 42 138 Operational Start - 2007; Completed in 2017
Ph II 113 428 Under construction Expected Completion - 2024
Ph IIA 17 42 Planning stage
Ph III 95 Concept Stage
Kolkata 6 lines 127 162 bn for 5 new lines Line 1 operational, other 5 Line 1 - Completed in 1984
lines under construction
Chennai Ph I 45 153 Operational Start - 2009; Completed in 2019
Ph I extension 9 38 Under Construction Start - 2016; Proposed completion - 2020
Ph II 119 690 Planning stage
Hyderabad Ph I 73 188 Partly Operational Start - 2012; Expected completion - 2020
Ph II 93 100 Concept stage DPR under prepraration
Jaipur Ph 1A 10 20 Operational Start - 2011; Completed in 2015
Ph 1B 2 11 Under Construction Start - 2013; Expected completion - 2019
Ph 2 24 104 Concept stage
Gurugram Ph I 5 13 Operational Start - 2010; Completed in 2013
Ph II 7 22 Operational Start - 2013; Completed in 2017
Noida Ph I 30 55 Operational Start - 2015; Completed in 2019
Ph II 15 26 Planning Stage
Ph II extension 36 57 Concept stage
Nagpur Ph I 42 87 Partly Operational Start - 2014; Expected completion - 2020
Ph II 48 112 Planning Stage Approved by state government
Lucknow Ph I 23 69 Operational Start - 2014; Completed in 2019
Ph II 12 45 Concept stage
Kochi Ph I 25 52 Partly Operational Start - 2013; Expected completion - 2020
Ph IA 2 3 Planning stage
Ph II 11 23 Planning stage Apporved by state government
Ahmedabad Ph I 40 108 Partly Operational Start - 2015; Expected completion - 2020
Ph II 29 55 Planning stage
Kanpur 32 120 Planning stage

Sector Update
Table 3: Status of metro projects across various cities (Contd…)

Particulars Phases Length (km) Project cost (INR bn) Status Time lines *
Amravati/Vijaywada 26 54 Concept Stage DPR being prepared
Agra 30 85 Planning stage Approved by Centre
Meerut 35 115 Awaiting approval by Centre
Indore Ph 1 32 75 Under construction Expected completion - 2024

Other phases 72 193 Concept stage
Bhopal Ph 1 28 69 Under construction Expected completion - 2023
Other phases 67 156 Concept stage
Patna 31 134 Approved by Centre Expected completion - 2024
Vizag 43 83 Concept stage DPR being prepared
Guwahati 65 180 Planning stage Approved by State cabinet
Surat 40 120 Planning stage Approved by Centre
Gorakhpur Concept stage DPR submitted to state government
Nashik Concept stage DPR preparation yet to begin
Note: * "Start" refers to Calendar Year in which construction started/expected to start
** Airport Metro is a part of Phase II

Fig. 1: Metro rail projects being dveleoped across the length and breadth of the country

Sector Update
Scope, extent of opportunities for service providers
We believe, service providers will be major beneficiaries of metro projects. Viability

concerns are likely to cloud opportunities for developers.
Civil construction
Civil construction forms the largest chunk in a metro project (more so if it is an underground
project). Major types of civil work involved in a metro projects include tunneling, viaducts,
stations, depots, etc.
Civil construction forms the
biggest portion of metro rail Civil contracts which involve tunnelling or any other structural work are complex and hence
projects; EPC contracts in this face lower competition. As a result, margins in these contracts are higher compared to usual
space enjoy better working construction contracts. Stations, depots, etc., are more of ‘building’ contracts and hence
capital cycle have lower margins.
In our view, more than margins, the benefit of undertaking metro projects lies in the
relatively better working capital cycle for these projects. With funding secured (from
government and multilateral agencies), agencies which develop metro projects generally
pay contractors on time (i.e., have better payment terms). This results in higher RoCEs for
contractors compared with construction projects in other segments where payment cycles
are longer.
Our analysis of civil construction contracts awarded over the past couple of years indicates
that most projects have been won by Indian companies. However, foreign firms have also
started making their presence felt.

Table 4: Beneficiaries of major civil construction awards

Project Companies
Delhi Metro HCC, J Kumar, Pratibha Industries, L&T, ITD Cementation, Era-Metrostroy, NCC, MBL Infra, Supreme Infra,
Sadbhav Engg, JMC, Valecha Engg, Lanco Infratech, Tata Projects (TPL), Continental Engineering
Bengaluru Metro Soma Enterprises, ITD Cementation, NCC, Simplex, HCC, L&T, IVRCL
Mumbai Metro Reliance Infra, Simplex, J Kumar, RCC-MBZ, L&T, Soma, ITD Cementation, TPL, NCC, SEW Infra, Ahluwalia
Contract, GGYHBCL-Neeraj Cement Structural-MPKHS, Continental Engineering
Chennai Metro Gammon, Afcons, NCC, URC Construction, L&T, Consolidated Construction
Hyderabad Metro L&T
Ahmedabad Metro J Kumar, URC Construction, Afcons, L&T, TPL, Ranjit Buildcon, Simplex, DRA – CICO, Pratibha Industries,
Gannon Dunkerly-PSPO
Pune Metro NCC, HCC, J Kumar, TPL
Lucknow Metro L&T, Sam India, TPL, SP Singla
Kochi Metro L&T, Soma Enterprises, Era-Ranken, McNally Bharat, CVCC-VNC
Nagpur Metro NCC, Pratibha Industries, Afcons, ITD Cementation
Indore Metro Dilip Buildcon
Bhopal Metro Dilip Buildcon
Navi Mumbai Metro J Kumar, NCC, San José Constructora
Kolkata Metro Simplex, L&T, Consolidated Construction, ITD Cementation, Afcons
Gurugram Metro NCC, IL & FS
Jaipur Metro DSC Limited, ITD Cementation, Pratibha Industries, BL Kashyap, Continental Engineering, KMV-RVR
Rolling stock
The rolling stock used in various Indian cities uses broad and standard gauge. Apart from
Delhi and Kolkata Metros, which use both these gauges, all other networks use only
standard gauge.
Rolling stock forms 15-20% of As far as Delhi Metro is concerned, while broad gauge was used in Phase I, from Phase II
overall project cost; most contracts lines are using standard gauge rolling stock. In Kolkata, while Line 1 uses broad gauge,
for rolling stock have been won by standard gauge is being used in Line 2.
foreign companies
Rolling stock forms 15-20% of overall project cost. Our analysis of rolling stock orders which
have been awarded so far indicates that these orders are generally awarded 6-12 months
after civil construction starts.
Most contracts in this field have been won by foreign companies like Hyundai Rotem,
Bombardier, Alstom, CSR Nanjing, CRRC, among others. The only Indian player to make its
presence felt is BEML. Titagarh Wagons has also started bidding for metro rail coaches over
the past year. News reports suggest that Maha Metro is setting up its own coach
manufacturing facility in Wardha, where it is planning to manufacture coaches for Pune and
Nagpur Metros.

Sector Update
Table 5: Beneficiaries of major rolling stock awards

Project Companies
Delhi Metro Bombardier, BEML
Bengaluru Metro BEML
Mumbai Metro BEML, Alstom, CSR Nanjing
Chennai Metro Alstom
Hyderabad Metro Hyundai Rotem
Ahmedabad Metro Hyundai Rotem
Pune Metro Maha Metro
Lucknow Metro Alstom
Kochi Metro Alstom
Nagpur Metro CRCC
Navi Mumbai Metro CSR Zhuzhou
Kolkata Metro BEML, CAF Beasain
Gurgaon Metro Siemens, CRRC
Jaipur Metro BEML
The burgeoning opportunity for rolling stock in India will continue to attract global majors. In
fact, some of them have started manufacturing coaches in India as increased indigenisation
will boost cost savings. For e.g., Bombardier has a plant in Savli (Vadodara), while Alstom has a
plant in Sri City SEZ, Tada.
Systems work
Apart from civil construction and rolling stock, the other major component in the
Like rolling stock, majority of the
development of a metro network is the systems work. This includes signalling &
orders in the systems space have
communication systems, power transmission, track laying, baggage handling system,
been bagged by foreign firms
automation control systems, fare collection systems, etc.
Our analysis of orders awarded in this space indicates that like rolling stock, majority of the
orders in this space have been bagged by foreign firms (sometimes in collaboration with
their Indian arms). Akin to rolling stock contracts, systems works are also awarded 6-12
months after civil construction contracts.
Table 6: Beneficiaries of major systems awards

Project Companies
Delhi Metro Siemens, ABB, Alstom, Bombardier, Nippon Signal
Bengaluru Metro Alstom, Thales, ABB, Siemens
Mumbai Metro ABB, Siemens, Thales, Alstom, L&T, Kalindee (Texmaco
Rail), Shanghai Tunnel Engineering
Chennai Metro Siemens
Hyderabad Metro Thales, Samsung
Ahmedabad Metro Siemens, Nippon Signal, L&T
Pune Metro Alstom
Lucknow Metro Alstom, L&T, Kalindee
Kochi Metro Alstom
Nagpur Metro Siemens, L&T, Bright Power, Rahi Infrastructure
Navi Mumbai Metro Ansaldo STS
Kolkata Metro Ansaldo STS
Jaipur Metro Alstom, ABB

Historically, bulk of the rolling stock and systems contracts have been bagged by foreign
firms. However, this may change in the future pursuant to several government initiatives to
Implementation of the ‘Make in promote the ‘Make in India’ programme. These include stipulating certain mandatory
India’ policy is likely to lead to conditions to be incorporated in tender documents of metro companies for procurement of
increasing indigenisation for metro metro cars and related critical equipment and sub-systems, procurement of only ‘Made in
rail equipments India’ signaling equipment, besides standardising technical parameters for rolling stock
(metro coaches) and signaling equipment.
The government has stipulated the following mandatory conditions to be incorporated in

tender documents:
 Minimum 75% of the tendered quantity of metro cars will be manufactured in India
with progressive indigenisation of content, for which the contractor may either
establish an independent manufacturing facility in India or partner with Indian
manufacturers, if the procurement is more than 100 cars.
 To facilitate maintenance through easy availability of spares beyond the warranty

period, an identified list of critical equipment and sub-systems will be included in the
tender document for ensuring indigenous manufacturing of a minimum of 25% of such
equipment, either by Original Equipment Manufacturers themselves by establishing a
wholly owned subsidiary in India or through Indian manufacturers.
 Requirement of metro cars at the state level will be clubbed to enable applicability of
local procurement norms.
 To develop in-house expertise on long-term basis, metro companies with large size
fleet to undertake in-house maintenance.
Further, to promote indigenous manufacturing, the government has stipulated procurement

of nine types of signaling equipment from within the country. Metro companies have also
been directed to develop maximum possible local competence so that knowhow and
technical support are available within the country. Indian companies have to be associated
with production of a wide range of signaling and train control project equipment.
Indigenisation of several metro functions has also been prescribed. These relate to
communication systems, managing operational disturbances, time table preparation, fault
reporting, control traction power, maintenance, infrastructure supervision, rolling stock
management, etc.
We believe, these policy guidelines will incentivise setting up of manufacturing facilities in

the country and thus enhnace the share of local content going ahead.

Sector Update
Opportunity analysis
We anticipate development of the metro network in various cities to generate orders

worth ~INR2,500bn over the next five years.
While calculating the size of the overall opportunity, we have included only those cities
where the DPR has been prepared and the route alignment has been finalised. Thus, cities
like Vijaywada, Vizag, Jaipur (Phase II) and Hyderabad (Phase II), which are at conceptual
Metro rail development is likely to stage and the DPR is yet to be prepared, or whose future is uncertain, have not been
lead to ~INR2500bn orders over included in our analysis.
the next five years; civil
construction orders will form the Other assumptions are:
biggest chunk of this at
 We have not included monorail orders as part of this analysis.
~INR1500bn
 Of the overall cost, 45% pertains to civil construction, 20% to rolling stock and 15% will
be spent on systems (electrical and communication) work.
 Systems and rolling stock contracts will be awarded 6-12 months after the award of civil
construction contracts.
 We have not included Meerut Metro, which is currently awaiting the Centre’s approval,
as it is likely to be put on hold in view of the Delhi-Ghaziabad-Meerut Regional Rapid
Transit System (RRTS), that has recently been approved by the central government.
Our analysis indicates that of the overall ~INR2,500bn opportunity, ~INR1,510bn pertains
to civil construction, ~INR440bn to systems i.e., electrical and signalling, while ~INR590bn
is the scope for rolling stock.
Table 7: Expected ordering—Construction, systems and rolling stock

Ordering scope (INR bn) FY20 FY21 FY22 FY23 FY24 Total Potential beneficiaries
Civil construction 226 494 357 341 94 1,512 L&T, NCC, Simplex Infra, J Kumar, Texmaco Rail
Systems 0 33 80 175 151 440 Siemens, ABB
Rolling stock 0 44 107 281 155 587 BEML, Titagarh Wagons
Total 226 572 545 797 400 2,539
Source: Edelweiss research
In FY20 and FY21, we expect civil construction awards to drive overall project awarding.
However, over the next few years, we expect this trend to shift towards systems and rolling
stock. In FY24, we expect overall project awarding to be driven by systems and rolling stock.
During FY20, Delhi, Mumbai and Bengaluru Metros are expected to drive project awards.
The systems and rolling stock awards are likely to be driven by Mumbai Metro. Civil
construction awards are expected to rise significantly in FY21, with major awarding in
Chennai Metro (Phase II), Mumbai Metro, Delhi Metro and Bengaluru Metro. After FY21,
systems and rolling stock orders are expected to pick up and overtake civil construction
awards by FY23.
We have summarised the tentative time line of project awards (civil construction, systems
and rolling stock contracts) for various metro networks over the next couple of years. We
have further broken down the awards in terms of respective projects for ease of reference.

Table 8 Civil construction order awards—Likely timelines

Project / Phase FY20 FY21 FY22 FY23 FY24 Total
Delhi - Phase IV 84 84 42 211
Mumbai - Line 5 38 38
Mumbai - Line 10 10 10 20
Bengaluru - Phase II 51 51 102
Nagpur Metro - Ph II 25 25 51
Lucknow Metro - Line 1B 20 20
Chennai Metro Phase II 104 104 104 311
Ahmedabad - Phase II 12 12 25
Agra Metro - Phase 1 19 19 38
Kochi Metro - Phase II 5 5 10
Noida Metro - Phase II 6 6 12
Noida Metro - Airport Extension 13 13 26
Indore Metro 16 16 35 35 102
Bhopal Metro 15 15 28 28 86
Kanpur Metro 27 27 54
Patna Metro - Phase I 30 30 60
Guwahati Metro - Phase I 41 41 81
Surat Metro - Phase I 27 27 54
Navi Mumbai 10 10 21
Allahabad Metro 18 18 36
Total 226 494 357 341 94 1512
With respect to civil construction contracts, Delhi, Mumbai and Chennai Metros are
expected to provide the significant near-term opportunity.

Sector Update
Table 9: Systems (electrical and signalling) order awards—Likely timelines

Delhi - Phase IV 35 35 70
Chennai Metro Phase II 35 35 69
Ahmedabad - Phase II 8 8
Agra Metro - Phase 1 13 13
Kochi Metro - Phase II 3 3
Noida Metro - Phase II 4 4
Indore Metro 11 11
Bhopal Metro 10 10
Kanpur Metro 18 18
Patna Metro - Phase I 20 20
Guwahati Metro - Phase I 27 27
Surat Metro - Phase I 18 18
Navi Mumbai 7 7
Total 0 33 80 175 151 440
As far as systems contracts are concerned, near-term opportunity is in Mumbai Metro (Lines
4 and 6) which are expected to be awarded in FY21. After this, other Mumbai Metro lines, as
well as new projects such as Indore, Bhopal, Meerut and Patna, will come up for awarding.

Table 10: Rolling stock awards—Likely timelines

Delhi - Phase IV 94 94
Chennai Metro Phase II 46 46 92
Ahmedabad - Phase II 11 11
Agra Metro - Phase 1 17 17
Kochi Metro - Phase II 5 5
Noida Metro - Phase II 5 5
Indore Metro 15 15
Bhopal Metro 13 13
Kanpur Metro 24 24
Patna Metro - Phase I 27 27
Guwahati Metro - Phase I 36 36
Surat Metro - Phase I 24 24
Navi Mumbai 9 9
Total 0 44 107 281 155 587
Rolling stock contracts are likely to follow a similar time line as systems contracts.
Funding of projects
While certain projects have been awarded on PPP mode such as Hyderabad Metro Phase I,
and Pune Metro Line 3, we expect a majority of the projects to be funded by the
government.
With negligible private sector

As discussed in the Policy Framework section above, Metro Rail Policy 2017 states that the
participation in metro
central government will provide financial support (in the form of equity and subordinate
development, most projects are
debt), subject to a ceiling of 20%. Therefore, the maximum burden on central government
likely to be funded through ~20%
for funding these projects will be ~INR700bn (assuming 20% of overall funding to come from
contribution from central and state
the Center and negligible private sector funding).
government each with the balance
coming from debt from
Assuming project award over next five years and implementation over further three-four
multilateral development agencues
years, the annual central contribution will be mere ~INR90bn. With a gross budgetary
support of ~INR192bn in the FY20 Union Budget (interim) towards metro rail projects, we do
not forsee any funding issues and we expect continued central government support for
metro projects in the future.
News reports indicate that the central government is setting up a fully-owned SPV to house
all its equity and debt investments in metro rail projects across the country. The SPV, which

Sector Update
will be under the Ministry of Housing & Urban Affairs, will also monitor all metro projects.
The SPV will raise funds via a mix of equity, debt and also borrow from external agencies. It
will borrow funds directly from the market or from the state-owned India Infrastructure
Finance Company (IIFCL).
Table 11: Valuation snapshot

Company CMP Asset value EPS (INR) Impled P/E for EPC business Implied P/BV
(INR/share) (INR/share) FY19E FY20E FY19E FY20E FY19E FY20E
Ashoka Buildcon* 119 2 8.9 8.4 13.2 14.0 1.5 1.4
NCC* 97 1 9.8 10.5 9.8 9.1 1.2 1.1
J Kumar Infra 132 0 21.5 25.8 6.2 5.1 0.6 0.5
Simplex Infra* 156 54 21.2 29.4 4.8 3.5 0.3 0.2
KNR Constructions * 245 62 13.2 12.3 13.9 14.8 1.9 1.7
Ahluwalia Contracts 324 0 18.9 25.8 17.2 12.5 2.9 2.4
Titagarh Wagons ** 62 6 1.7 4.8 32.2 11.7 0.7 0.7
Texmaco *** 67 5 2.5 4.8 24.6 13.0 1.2 1.1
Note: * P/E & P/BV for implied construction business for EPC companies and for standalone business
for Texmaco, Titagarh
** Asset value includes value of Firema and AFR
*** Asset value includes value of Bright Power

A quick look at various metro projects in India

Delhi Metro
Delhi Metro: This was the trailblazer as far as metro projects in India are concerned. DMRC
was set up in 1995 and is a JV between the Centre and Delhi state with equal equity
participation. Construction on the project started in 1998 and first section opened in 2002.
Till date, Phases I and II of the network, spanning ~190km, have been completed at an
estimated cost of INR306bn. While Phase I (65km) was completed in 2006, Phase II (125km
including Airport Express Line) was completed in 2011.
The third phase of Delhi Metro is
nearing completion; work on the Currently, Phase III (160km) of the network costing ~INR411bn is under construction and is
fourth phase with an estimated expected to be completed in 2020. Apart from this, Phase IV (~105km), at an estimated cost
overall cost of ~INR468bn is of ~INR468bn, is in the planning stage and is proposed to be completed by 2025. After
expected to commence soon completion of Phase IV, the Delhi Metro network will span 450km plus. It has been hinted
by DMRC that by the time Phase IV is completed, there may arise a need for Phase V.
Currently, Delhi Metro is the largest metro rail network in India in terms of the number of
stations, length, ridership as well as the number of lines.
Brief description of various phases:

 Phase I: This phase consists of three lines spread over 65km; it was completed at an
overall cost of ~INR106bn. The central government approved the investment proposal
for this phase in September 1996. Work started on October 1, 1998, with a sanctioned
completion time of 10 years; work on all the three lines was completed by Decemeber
2005, two years and nine months ahead of schedule.
 Phase II: This phase consists of a 125km long network with 86 stations and six lines
(Red, Yellow, Blue, Green, Violet and the Airport Express). Work started in 2006. This
phase was twice the length of Phase I and was completed three months ahead of
schedule.
This phase also includes the Airport Express Line; this line costing ~INR57bn with a
length of ~23km has already been completed. The project, which was implemented on
a PPP basis, became operational in February 2011.
 Phase III: This phase, which was sanctioned in September 2011 at a cost of ~INR352bn,
spans ~160km. This phase is expected to be completed at a total cost of ~INR411bn.
All contracts for this phase have been awarded. While certain lines have been
comissioned, other lines are in various stages of development. Overall, the phase is
scheduled to be completed by 2020.
 Phase IV: Significant opportunity in future from an ordering perspective arises from the
planned Phase IV of Delhi Metro. This is a proposed ~105km network with an estimated
overall cost of ~INR468bn. Of this, three lines, with an overall length of ~63km and a
cost of ~INR249bn, have been approved by the Centre, and the balance three lines,
with a length of ~42km and cost of ~INR184bn, are awaiting the Centre’s approval.
This phase is proposed to be completed by 2025, subsequent to which the overall Delhi
Metro will span ~478km.

Sector Update
We expect civil construction awarding between FY20 and FY22 and the rolling
stock/systems awarding in FY23.
Apart from Delhi Metro, there is another rail mobility project in the National Capital
Region (NCR) called the Regional Rapid Transit System (RRTS). This is a planned high
speed commuter service along dedicated corridors in NCR. Two lines have been
proposed:
o Delhi-Meerut RRTS: This is a propsoed 82km long corridor connecting Delhi-
Ghaziabad-Meerut at an estimated cost of ~INR303bn. This is expected to start
operations by 2025.
o Delhi-Alwar RRTS: This is a propsoed 164km long corridor connecting Delhi,
Gurgaon, Rewari and Alwar, with a total estimated cost of ~INR370bn. This is
propsoed to be complete by December 2024.
While these dedicated high speed corridors will be integrated with the Delhi Metro,
they form an independent system outside the gambit of metro rail, and hence, we are
not considering these projects in our study.
Table 12: Total opportunity from Delhi Metro

Ordering scope (INR bn) FY20 FY21 FY22 FY23 FY24 Total
Civil construction 84 84 42 0 0 211
Systems 0 0 0 35 35 70
Rolling stock 0 0 0 94 0 94
Total 84 84 42 129 35 375
Bengaluru Metro
Work on a metro network in Bengaluru had started quite early with the DMRC submitting a
DPR in 2003. Construction on Phase I was envisaged to commence in 2005, but was delayed.
Work finally began in 2007 and in October 2011, Bengaluru became the third city in India to
have an operational metro when operations commenced on a 7km stretch. Subsequenrly,
Bengaluru Metro Phase II, costing
over 2014-17, the remaining lines were commissioned, and currently, Phase I of the network
around INR470bn, is currently
is fully operational.
under development
Phase II, spanning ~130km, with a total estimated outlay of ~INR470bn (including the Red
Line extension to the airport and the Outer Ring Road Metro), is under construction and is
expected to be fully operational by 2024.
The project is being implemented by Bangalore Metro Rail Corporation (BMRC), which is
jointly owned (50:50) by central and state governments.
Details of the two phases are:

 Phase I: This 42.3km stretch was approved by the central government in May 2006 and
the foundation stone was laid in June 2006. Civil construction, however, began in April
2007. This phase consists of two lines (divided in to four reaches) and has an 8.88km
underground section. Built on the DMRC model, the cost was initially estimated at
INR54bn; however, the final outlay came at ~INR144bn. This phase is currently fully
operational.

 Phase II: This phase, with a total length of ~130km, including the planned airport
extension and the Outer Ring Road Metro, is currently under construction. This phase
consists of construction of two new lines (Yellow and Red) as well as extensions of lines
build in Phase I. This phase also includes a proposed 38km extension of the Red Line to
the Bengaluru International Airport as well as a 17km Outer Ring Road line from Silk
Board – K.R.Puram. This phase is estimated to cost ~INR470bn.
On the civil construction front, while some awarding has been completed, a couple of
packages of the Red Line from Dairy Circle to Nagawara, as well as the airport extension
and the Outer Ring Road line are yet to be awarded. Rolling stock and systems are yet
to be awarded for the entirety of Phase II.
Table 13: Total opportunity from Bengaluru Metro

Systems 0 0 17 17 0 34
Total 51 51 40 40 0 181
.Source: Edelweiss research
Mumbai Metro
Mumbai is witnessing probably the Mumbai also has ambitious plans to build a metro network within the city. We had
largest and amongst the fastest highlighted in our note earlier that Mumbai is witnessing probably the largest and amongst
metro rail expansion programme in the fastest metro rail expansion programme in the world currently (refer to, Mumbai
the world currently Metro: Opportunities of windfall). The plan is to build a network spanning ~270km across
12 lines. Details of the various lines are:
Table 14: Metro network planned in Mumbai

Length Scope of Work
Line Route (km) (INR bn) Mode Status
Line 1 Versova - Andheri – Ghatkopar 11 43 Elevated Operational
Line 2A Dahisar-DN Nagar 19 64 Elevated Under Construction
Line 2B DN Nagar-Mankhurd 24 110 Elevated Under Construction
Line 3 Colaba-Seepz 34 300 Underground Under Construction
Line 4 Wadala–Ghatkopar-Mulund–Teen Hath 35 155 Elevated Awarded
Naka–Kasarvadavali-Gaimukh
Line 5 Thane-Bhiwandi-Kalyan 25 84 Elevated Approved
Line 6 Lokhandwala-Jogeshwari-Kanjurmarg 15 67 Elevated Approved
Line 7 Andheri (E) – Dahisar (E) 16 62 Elevated Under Construction
Line 8 Mumbai Airport (CSIA) to Navi Mumbai Airport (NMIA) 35 150 Concept Stage
Line 9 Dahisar (E) (North side) -Mira-Bhayandar (Line 9) and 14 65 Partly underground Approved
Andheri to CSIA (Line 7 extension)
Line 10 Gaimukh - Shivaji Chowk (Mira Road) 11 45 Elevated Concept Stage
Line 11 Wadala - CSMT 11 87 Partly underground Concept Stage
Line 12 Kalyan - Dombivali - Taloja 21 41 Elevated Concept Stage
 Line 1: This 11km fully elevated line, which was built on a PPP basis, connects Versova to
Ghatkopar. The project was conceptualised in 1997 and a feasibility study was conducted

Sector Update
during 1997-2000. The contract to build it was awarded to a consortium of Reliance

Infrastructure and Veolia Transport. The concession agreement was signed in March 2007
and work began in February 2008. The project attained financial closure in October 2008.
The project was awarded by MMRDA for a concession period of 35 years. The line was
commissioned in June 2014 and is now fully operational. The overall project cost was
~INR43bn.
 Line 2: The project received state government approval in November 2006. Initially, in
August 2009, this project was awarded to a consortium of RInfra (48%), Reliance
Communication (26%) and SNC Lavalin (26%) on PPP basis. However, due to multiple
delays, this agreement was terminated in 2014 by mutual consent. Subsequently,
MMRDA appointed DMRC as a consultant to execute this line and construction
packages were awarded to various contractors.
This line has been split in to two sections:

o Line 2A: This is a 18.5km elevated section from Dahisar to DN Nagar with 16
stations. This is expected to cost ~INR64bn. Civil construction has been awarded to
JKIL, rolling stock to BEML and systems contracts to Alstom.
o Line 2B: This is a 23.6km elevated section from DN Nagar to Mankhurd with 22
stations. This line is expected to cost ~INR110bn. Civil construction packages have
been awarded to Simplex, a consortium of MBZ & RCC and a consortium of
GGYHBCL, Neeraj Cement Structural and MPKHS.
Overall, Line 2 is expected to be completed by 2020.
Table 15: Mumbai Metro Line 2 civil construction awards

Length Amount
Route (km) (INR bn) Companies
Line 2A - Dahisar-DN Nagar 19 14 J Kumar Infraprojects
Line 2B (DN Nagar-Mankhurd)
Elevated corridor and 11 13 11 Simplex
stations – ESIC Nagar to ILFS
Viaduct from MTNL to Chembur 6 5 RCC-MBZ
Viaduct from Diamond Garden 5 4 GGYHBCL, Neeraj Cement
to Mandale (Depot) Structural Ltd and MPKHS Pvt
Ltd
Total 42 34
 Line 3: This was originally supposed to be a 20km line connecting Colaba to Bandra.
However, in its final form, it will be a 33km line connecting SEEPZ to Colaba (Mumbai
Metro: On the fast track).
This fully underground line is estimated to cost ~INR300bn and will be built on the
DMRC model. Civil construction packages, worth ~INR181bn, were awarded in October
2015.


Route Length Amount Companies
(km) (INR bn)
Cuffe Parade, Vidhan Bhavan, Churchgate, Hutatma Chowk 4.0 30 L&T - Shanghai Tunnel Engineering Company
CST Metro (C&C) Kalbadevi, Girgaon, Grant Road 4.1 25 HCC - OSJC Moscow Metrostroy
Central Metro, Mahalaxmi, Science Museum, Worli, Acharya Atre Chowk 6.4 26 Soma - DOGUS
Siddhivinayak, Dadar, Sitaladevi 4.8 28 Continental Engineering Corporation - ITD

Cementation - Tata Projects
Dharavi, BKC, Vidyanagari, Santacruz 7.0 28 JKIL - China Railway No.3 Engineering Group
Domestic Airport, Sahar Airport, International Airport 3.5 21 JKIL - China Railway No.3 Engineering Group
Marol Naka (NATM), MIDC, SEEPZ & Aarey Depot (At grade) 2.7 23 L&T - Shanghai Tunnel Engineering Company
Total 32.5 181
Tunneling on the project is already underway and is progressing smoothly. We had

visited J Kumar Infraprojects’ Line 3 project site in order to gain insights in to the
project and size up execution (J Kumar Infraprojects - Site visit soups up confidence in
growth potential).
The rolling stock contract for this line, for 210 coaches worth ~INR20bn, was awarded
to Alstom in 2017.
Systems contracts were awarded to multiple contractors:

o Traction system or overhead equipment - Alstom
o Power supply system (four packages) – L&T
o Tunnel ventilation and environmental control system – Shanghai Tunnel
Engineering
o Signalling, train control, platform screen doors and telecommunication systems –
Alstom
o Automatic fare collection – Kalindee (Texmaco Rail)
The line is expected to be completed by 2021.
 Line 4: This is a 35km elevated line from Wadala to Gaimukh (including Line 4A
extension from Kasarvadavali to Gaimukh) with 34 stations and an estimated outlay of
~INR155bn. This line is expected to be completed by 2022.

Sector Update

Length Amount
Bhakti Park Metro, Wadala TT, Anik Nagar Bus Depot, Suman Nagar, 5.4 5 Reliance-Astaldi
Siddarth Colongy and Amar Mahal Junction
Garodia Nagar, Pant Nagar, Laxmi Nagar, Shreyas Cinema, Godrej 6.4 5 TPL-CHEC
Colony, Vikhroli Metro & Surya Nagar
Gandhi Nagar, Naval Housing, Bhandup Mahpalika, Shangrila & 6.7 5 Reliance-Astaldi
Sonapur
Mulund Fire Station, Mulund Naka, Teen Haath Naaka (Thane), RTO 6.1 5 TPL-CHEC
Thane, Mahapalika Marg, Cadbury Junction & Majiwada
Kapurbawdi, Manpada, Tikuji-Ni-Wadi, Dongari Pada, Vijay Garden & 6.8 5 Reliance-Astaldi
Kasaradavali
Total 31.4 26
Rolling stock (216 coaches) and systems contracts are yet to be awarded.
 Line 5: This is a proposed 25km elevated line from Thane to Kalyan via Bhiwandi with
17 stations. This project is estimated to cost ~INR84bn. The line was approved by the
Maharashtra Cabinet in October 2017.
We expect civil works awarding in FY21 after the Center’s approval, and subsequently,
we expect rolling stock and systems awarding in FY22.
 Line 6: This is a proposed 15km elevated line from Lokhandwala to Kanjurmarg with 13
stations. This project is estimated to cost ~INR67bn.
While JKIL bagged two packages for civil contracts in August 2018, the rolling stock and
systems awarding is pending; we expect the same in FY21.
 Line 7: This is a 16km elevated line from Andheri (East) to Dahisar (East) with estimated
cost of ~INR62bn. This line is currently under construction.

Length Amount
Andheri – Aarey (viaduct along 5.4 3 Simplex
with 4 stations)
Aarey – Mahindra (viaduct along 5.9 4 JKIL
with 5 stations)
Mahindra-Dahisar (viaduct along 4.9 2 NCC
with 5 stations)
Total 16.1 10
The rolling stock contract was awarded to BEML and the systems contract was awarded
to Alstom.
 Line 8: This is a 35km proposed line from the Mumbai International Airport (CSIA) to
the upcoming Navi Mumbai airport (NMIA). This line is expected to cost ~INR150bn and
is currently at the concept stage.

 Line 9: This is a 14km partly underground line from Dahisar East to Mira-Bhayandar and
also includes the extension of Line 7 from Andheri East to CSIA. This line has been
approved and tenders have been floated for civil construction.
 Line 10: This is a 11km proposed elevated line from Gaimukh to Shivaji Chowk (Mira
Road). This is estimated to cost ~INR45bn and is currently at the concept stage.
 Line 11: This is a 11km proposed partly underground line from Wadala to CSMT. This is
estimated to cost ~INR87bn and is currently at the concept stage.
 Line 12: This is a 21km proposed elevated line from Kalyan to Taloja via Dombivali. This
is estimated to cost ~INR41bn and is currently at the concept stage.
Table 19: Total opportunity from Mumbai Metro

Systems 0 33 22 0 49 104
Total 29 115 91 107 113 456
Chennai Metro
Chennai was the second city in India, after Kolkata, to have a MRTS network. Chennai MRTS
is owned by the Indian Railways and was built at a cost of INR11.7bn. While the project was
taken up for implementation by Railways in 1983-84, construction started in earnest only in
1991. Phase 1 started in 1995 and was the first elevated line in India. Since then, the
network was extended in 2004 and 2007, and currently spans ~20km.
Apart from MRTS, there is a metro system in the city that is partly operational. This metro
system is being developed in two phases.
Phase I: Phase I of the project consists of two lines totalling ~54km, of which ~45km is
currently operational and the balance is expected to be completed in 2020. The Phase I was
developed at a total cost of ~INR191bn.
Phase I consists of the following lines:

Phase II of Chennai Metro has been
 Blue line: 23km from Washermanpet to Chennai International Airport
approved at a cost of ~INR690bn
 Blue line extension: 9km from Washermanpet to Wimco Nagar
 Green line: Chennai Central to St. Thomas Mount
Work on the project started in 2009. The Blue and the Green lines are currently operational
and the Blue Line Extension is expected to be completed in 2020.
Phase II: Under this phase, three lines spanning 119km have been approved at a total
estimated cost of ~INR690bn:
 Line 3: 46km line fron Madhavaram to Siruseri
 Line 4: 26km line from Poonamallee to Lighthouse
 Line 5: 47km line from Madhavaram to Sholinganallur
This large project is proposed to be completed by 2026.

Sector Update
Table 20: Total opportunity from Chennai Metro

Systems 0 0 0 35 35 69
Total 0 104 104 184 81 472
Hyderabad Metro
The Hyderabad Metro project was first conceptualised in 2005. A detailed feasibility study
was carried out by DMRC in 2005. The project was approved by the central government in
April 2008. The project was proposed to be built entirely on PPP basis with the state
government holding a minority stake.
The project was first bid out in 2008 with the total cost estimated at ~INR118bn. The central
government had approved a VGF of INR35bn for the project. The project was awarded to a
consortium including Maytas Infra. Instead of asking for a VGF, the consortium had
promised to pay the government INR303.11bn during the concession period (with a present
While Phase I of Hyderabad Metro value of INR12.4bn, discounted at 13.5%). However, following the Satyam controversy and
is currently under development, the inability of the consortium to achieve financial closure, the project was scrapped in July
Phase II is also under consideration 2009.
Fresh bids were invited in July 2010 with an approved project cost as per central
government of INR121.3bn. The maximum amount of VGF on the project was capped at
40% i.e., INR48.5bn.
The project was awarded to Larsen & Toubro (L&T), which won the project by asking for the
least amount of VGF—INR14.58bn (12% of project cost). There were two other bidders for
the project—a consortium of Transstroy India-OJSC Transstroy Russia-CR18G which had
asked for a VGF of INR22bn (18% of project cost) and a consortium including Reliance Infra
which had asked for a VGF of INR29.91bn (25% of project cost).
In addition to the VGF, sops to the developer were provided through a right to commercially
develop land available at depots (212 acres) and 10% of the carpet area of station sites. This
aggregates to a cumulative maximum of 12.5mn sq ft in the case of depots and a cumulative
maximum of 6mn sq ft in the case of stations.
The Hyderabad Metro consisting of three lines stretching 73km is the world’s largest metro
rail project on PPP basis. It has a concession period of 35 years (including five years for
construction) and can be extended by another 25 years. The network consists of the
following lines:
 Line 1: 29km line connecting Miyapur and LB Nagar. This line is currently operational.
 Line 2: 15km line connecting JBS to Falaknuma. This line is under construction and
expected to be complete by 2022.
 Line 3: 28km line connecting Nagole to Raidurg. In this line, the section between Nagole
and HITEC City, spanning 27km, is currently operational. The extension to Raidurg,
which is around a kilometer long, is currently under construction.
The total cost for these lines (Phase I) is estimated at ~INR188bn.

Phase II of Hyderabad Metro is also under consideration with various lines spanning 100km
plus being proposed.
Ahmedabad Metro
This is the metro network in Ahmedabad and Gandhinagar. The state government has set up
Metro Link Express for Gandhinagar and Ahmedabad (MEGA) for implementing the project.
Phase I: Phase I of the project consists of two lines spanning 68km with a total estimated
cost of ~INR163bn.
 Line 1: This is the East-West corridor from Vastral Gaam to Thaltej Gaam with a length
of 21km and estimated cost of ~INR67bn. This line is proposed to have 18 stations.
Most of this line is elevated.
This line is partially operational (Apparel Park to Vastral Gaam section of 6km) and the
rest is expected to be completed by 2020.
 Line 2: This is the North-South corridor from Motera to Gyaspur with a length of
Phase II of Ahmedabad Metro with 18.5km and estimated cost of ~INR40bn.
estimated cost of ~INR55bn has This is an elevated line that is currently under construction and is expected to be
been approved completed by 2020.
The rolling stock order of 96 coaches was awarded to Hyundai Rotem for ~INR18bn. The
systems contracts were awarded to Siemens, Nippon Signal and L&T.
Table 21: Ahmedabad Metro Phase I civil construction awards

Route Length (km) Amount (INR Companies
Line 1
Apparel Park to Vastral Gam Viaduct 6.0 3 J Kumar Infraprojects
Apparel Park to Vastral Gam (6 stations) NA DRA – CICO JV
East Ramp to Kalupur (Tunnels & 2 stations – 2.45 km) 2.4 7 Afcons Infrastructure
Kalupur to West Ramp (Tunnels & 2 stations – 4.38 km) 4.4 9 Larsen & Toubro
West Ramp to Thaltej Gam (Viaduct, Sabarmati Bridge & 7 stations – 8.21 km) 8.2 7 Tata – CCECC JV
Line 2
Motera to Ranip Viaduct 4.9 2 Ranjit Buildcon
Motera to Ranip stations -5 NA 2 Pratibha – Ranjit JV
Ranip-Shreyas Viaduct & 6 stations – 8.94 km 8.9 7 Simplex Infrastructure
Shreyas - Gyaspur (Viaduct & 4 Stations) 4.6 4 IL&FS Engineering
Total 39.4 42
Phase II: Phase II of Ahmedabad Metro consists of two lines with estimated cost of
~INR55bn. This was recently approved by the Union Cabinet. One line with a total length of
21km will connect Motera to Gandhinagar and the other 5.4km line will provide connectivity
to the under development GIFT City.
Table 22: Total opportunity from Ahmedabad Metro

Systems 0 0 0 8 0 8
Total 0 12 12 19 0 44

Sector Update
Pune Metro
Pune Metro is the metro network serving Pune and Pimpri Chinchwad. The network consists
of three lines with a total length of ~55km and total estimated cost of ~INR206bn. Line 1
and 2 form part of Phase I and Line 3 forms part of Phase II.
Line 1: This consists of a 11.6km elevated stretch between Pimpri Chinchwad Municipal
3 lines of Pune Metro are currently Corporation (PCMC) and Shivaji Nagar, and a 5km underground stretch between Shivaji
under development Nagar and Swargate. This line is currently under construction and is expected to be
completed by 2021.
Line 2: This consists of a 14.7km elevated stretch between Vanaz and Ramwadi. This line is
currently under construction and is expected to be completed by 2021.
Table 23: Pune Metro Line 1 and 2 civil construction awards

Route Length Amount Companies
(km) (INR bn)
Line 1
PCMC – Range Hills Viaduct 10.8 5 NCC
PCMC – Range Hills (9 stations) NA 5 HCC–AL FARA’A
Tunneling shafts at Agricultural College
NA 2 J Kumar
and Swargate Metro
Shivaji Nagar – Swargate tunnel
Package 1 2.5 11 TP-Gulermak
Package 2 2.5 12 TP-Gulermak
Line 2
Vanaz – Ramwadi viaduct 7.2 4 NCC
8 elevated stations NA 5 HCC–AL FARA’A
Civil Court-Ramwadi viaduct 7.6 4 J Kumar
Total 30.5 47
The rolling stock for Pune Metro Lines 1 & 2 is proposed to be manufactured at
MahaMetro’s proposed Butibori plant (at least 75% of the coaches are proposed to be
manufactured here). As per news reports, MahaMetro’s first preference is to form a joint
venture with a coach manufacturer, but if it does not get any response, it will set up the
plant on its own and proceed with the manufacturing.
Signalling systems orders for Lines 1 & 2, worth ~INR3bn, have been awarded to Alstom.
Line 3: This consists of a 23.3km elevated stretch between Hinjewadi and Shivaji Nagar. This
project has been awarded to a consortium of Tata Realty-Siemens on PPP mode for
~INR83bn. While the EPC component of this project will be handled by Tata Projects, the
rolling stock and systems are likely to be supplied by Siemens, leveraging Siemens’ strong
presence in these segments.
Hence, we are not considering any opportunity from this line for other contractors.

Lucknow Metro
Lucknow Metro consists of a 23km operational North-South corridor and a planned 12km
East-West corridor, that is currently awaiting state cabinet approval.
Construction of the North-South line began on September 27, 2014, with the 8.5km stretch
from Transport Nagar to Charbagh Railway Station beginning commercial operation on
September 5, 2017, making it the fastest built metro rail system in the country. The
complete 23km stretch was inaugurated in March 2019.
North-South corridor: This is a 23km partly underground (19km elevated and 4km
underground) stretch between Amausi (airport) and Munshi Pulla. The total cost for this
project was ~INR69bn and is currently operational.
Table 24: Lucknow Metro North-South corridor civil construction awards

Length Amount
Airport terminal, Amausi, 2.0 3 Sam India
Transport Nagar – Charbagh 8.5 7 Larsen & Toubro
Charbagh – KD Singh Babu 3.4 12 Tata – Gülermak
(underground)
KD Singh Babu – Munshipulia 8.6 8 Larsen & Toubro
(Elevated)
Total 22.6 29
The rolling stock award worth ~INR11bn for 80 coaches was won by Alstom. Systems
contracts have been awarded to Alstom (signalling), L&T (telecommunications) and Kalindee
(Texmaco Rail) (ballastless tracks).
East-West corridor: This is a planned 12km partly underground stretch between Charbagh
Railway Station and Vasant Kunj. The total cost for this project is expected to be ~INR45bn.
The DPR has been submitted to the state government and approval for the same is awaited.
Table 25: Total opportunity from Lucknow Metro

Systems 0 0 0 7 0 7
Total 0 20 0 16 0 36
Kochi Metro
The Kerala state government had asked DMRC to prepare a DPR for the project in 2004. The
project was envisaged on the DMRC model with central and state government participation.
However, it look long for the central government approval to materialise. The project
received approval from the Public Investment Board (PIB) in March 2012 and from the
Union Cabinet in July 2012. It is being implemented by Kochi Metro Rail (KMRL), which was
formed in August 2011. The project is being carried out in two phases:

Sector Update
 Phase I: The first phase consists of a 25km stretch between Aluva and Pettah; this
phase is expected to cost ~INR52bn. It includes the following lines:
o Aluva to Palarivattom – 13km stretch that was commissioned in June 2017.
o Palarivattom to Maharaj’s College – 5km stretch that was commissioned in August
Phase II of Kochi Metro with a cost
2017.
of ~INR23bn, has been approved
by the state government and is o Maharaja’s College to Thykkoodam – 5km stretch that is currently under
awaiting the Center’s approval construction and is expected to be completed by June 2019.
o Thykoodam to Pettah – 1km stretch that is currently under construction and is
expected to be completed by June 2020.
 Phase IA: This is an extension of the Phase 1 line, extending the line from Pettah to
Tripunithura via SN Junction. This is a 2km extension at a cost of ~INR3bn. This is
currently in the planning stage.
Civil construction contracts for Phase I and IA were awarded to L&T, Soma, CVCC and
Era-Ranken JV. The rolling stock contracts for 75 coaches as well as the systems
contracts (for signalling, train control, telecommunication, automatic fare collection
and power) have been awarded to Alstom.
 Phase II: This phase consisting of an 11km stretch between Jawaharlal Nehru Stadium
and Infopark II in Kakkanad, with a total expected outlay of ~INR23bn, has been
approved by the state government and is awaiting the Center’s approval.
Table 36: Total opportunity from Kochi Metro Phase II

Systems 0 0 0 3 0 3
Total 0 5 5 8 0 18
Nagpur Metro
The Nagpur Metro system consists of a 90km metro network, of which 13.5km is
operational, 28.5km is under construction and 48km is being planned. The network has
been planned in two phases:
Phase I: This phase is a 42km network with 40 stations and a total estimated cost of
~INR87bn. Part of this line (13.5km) is operational and balance is expected to be completed
by 2022.
This phase consists of two lines:

 Line 1: This is a 22km North-South corridor from Automotive Square to Khapri with 20
stations.
 Line 2: This is a 19km East-West corridor from Lokmanya Nagar to Prajapati Nagar with
20 stations.
A 13.5km stretch between Sitabuldi and Khapri, with 11 stations, was inaugurated in March
2019 and is currently operational.

Phase II: This phase consists of a planned network of 48km, with an estimated cost of
Phase II of Nagpu Metro with a ~INR112bn. The following lines are proposed to be included in this phase:
cost of ~INR112bn, has been  Lokmanya Nagar – Hingna: 6.6km
approved by the state government  Wasudeo Nagar – Wadi: 4.5km
and is awaiting the Center’s
 Automotive Square - Kanhan River: 13km
approval
 Prajapati Nagar - Transport Nagar: 5.5km
 MIHAN – MIDC: 18.7km
This phase has been approved by the state government and is awaiting central
government’s approval.
Table 27: Total opportunity from Nagpur Metro Phase II

Systems 0 0 0 8 8 17
Total 0 25 25 20 20 90
Noida Metro
The Noida Metro network consists of one line (Aqua Line) from Sector 51 to Depot, with a
total length of 29.7km serving 21 stations. This is fully complete and is currently operational.
It was built at a total cost of ~INR55bn.
Phase II is on the cards and has been approved by the state government and is currently
awaiting the Center’s approval. This phase consists of a 15km line from Noida Sector 71 to
Knowledge Park V in Greater Noida, with nine stations, at an estimated cost of ~INR26bn.
A line connecting Greater Noida to the proposed airport at Jewar has also been proposed
and the DPR has been prepared for the same. This is proposed to be a 36km line with 25
stations, at an estimated cost of ~INR57bn.
Table 28: Total opportunity from Noida Metro Phase II and airport extension
Systems 0 0 0 4 0 4
Total 0 6 6 22 13 47
Indore Metro
Indore Metro system is currently under construction. The total system consists of a network
length of 104km with estimated cost of ~INR268bn.
The first corridor, which is a 32km ring line starting and ending at Bengali Square, has been
approved by the Centre. This line has 30 stations and is expected to cost ~INR75bn.

Sector Update
Construction has commenced on a 5km stretch between ISBT and Mumtaj Bag Colony, for
Metro rail projects in Indore and
which the civil construction has been awarded to Dilip Buildcon for a total cost of ~INR2bn.
Bhopal are currently under
development
The remaining corridors, totalling up to ~72km, with an estimated cost of ~INR193bn have
been given an “in-principle approval” by the Union Finance Ministry and are awaiting
approvals from the finance ministry’s Public Investment Board, after which it will be sent to
the Union Cabinet for approval.
Table 29: Total opportunity from Indore Metro

Systems 0 0 11 0 0 11
Total 16 16 25 35 35 128
Bhopal Metro
The Bhopal Metro is under construction with a total proposed length of 95km and a total
estimated cost of ~INR225bn. This system has been divided in to two phases:
Phase I: This phase consists of two corridors with a total length of 28km and estimated cost
of ~INR69bn. This phase has been approved by the Centre and construction has
commenced. The two corridors in this phase are:
 Corridor 1: AIIMS to Karond Circle (15km)
 Corridor 2: Ratnagiri Tiraha to Bhadbhada Square (13km)
The civil construction contract for a 6km stretch between AIIMS and Subhash Nagar
(excluding stations) has been bagged by Dilip Buildcon for ~INR2bn and construction has
commenced.
Phase II: Phase II is expected to span 67km with a total estimated outlay of ~INR156bn. This
phase was recently given an “in-principle approval” by the Union Finance Ministry, and is
awaiting approvals from the finance ministry’s Public Investment Board, after which it will
be sent to the Union Cabinet for approval.
Table 30: Total opportunity from Bhopal Metro

Systems 0 0 11 0 0 11
Total 15 15 24 28 28 110
Navi Mumbai
The Navi Mumbai Metro is an under construction project that is being planned and
constructed by the City and Industrial Development Corporation (CIDCO). The system is
planned to consist of three lines with a total length of 23km and estimated cost of
~INR76bn.

Although the Maharashtra government has released a 106.40km master plan comprising six
lines, news report suggest that it is unlikely that this will be followed. New metro lines are
expected to be announced once construction for the Navi Mumbai Airport project is kick-
started.
The three lines that are currently on the cards are:

 Line 1: Belapur-Kharghar-Taloja-Pendhar: This is a 11km line that is under construction
and is expected to be completed by 2020. This line has 11 stations and is being
constructed at a total estimated cost of ~INR31bn.
Table 31: Navi Mumbai Metro Line 1 civil construction awards

Length Amount
Belapur to Khargar Sector 14 4.3 1 J Kumar Infraprojects
Khargar Sector 14 – Pendhar 4.9 2 NCC Ltd
Construction of Taloja Depot NA 1 J Kumar – CRTG
Total 9.3 4
The rolling stock contract for Line 1 was awarded to CSR Zhuzhou at a cost of
~INR3bn and the systems conrtact was awarded to Ansaldo STS.
 Line 2: MIDC Taloja-Kalamboli-Khandeshwar: This is a proposed 10km line that will

be built at an estimated cost of INR40bn subsequent to completion of Line 1.
 Line 3: Interlink between Pendhar and MIDC: This is a 2km linking line that will be
built at an estimated cost of INR6bn subsequent to the completion of Line 1.
Table 32: Total opportunity from Navi Mumbai Metro

Systems 0 0 0 0 7 7
Total 0 0 10 10 16 37
Agra Metro
The proposed metro network in Agra consists of two lines with an overall length of 30km
Metro projects in Agra, Kanpur and
and a total estimated cost of ~INR85bn. The project has been approved by the Union
Patna with a cumulative
Cabinet. The two lines are:
investment of ~INR340bn have
been approved by the Center Line 1: Sikandra to Taj East Gate – 14km line with an 8km underground section and 6km
elevated section.
Line 2: Agra Cantt to Kalindi Vihar – 16 km elevated line.

Sector Update
Table 33: Total opportunity from Agra Metro

Systems 0 0 0 13 0 13
Total 0 19 19 30 0 68
Kanpur Metro
Kanpur Metro is a planned with a network length of 32km and total estimated cost of
~INR120bn. This project was recently approved by the central government.
The project consists of two corridors:

 Corridor 1 from IIT to Naubasta – This is a 24km corridor with 22 stations (8
underground and 14 elevated)
 Corridor 2 from Agriculture University to Barra-8 – This is a 9km corridor with 8 stations
(4 underground and 4 elevated).
Table 34: Total opportunity from Kanpur Metro

Systems 0 0 0 0 18 18
Total 0 0 27 27 42 96
Patna Metro
Patna Metro (Phase I) consists of a 31km partly underground network, with a total
estimated cost of ~INR134bn. This project recently received the Union Cabinet approval and
consists of two lines:
 Line 1: Danapur to Mithapur – This is a 17km line, which is mostly underground (11km)
and partly elevated (5km) and comprises of 11 stations (tree elevated and eight
underground).
 Line 2: Patna Junction to ISBT – This is a 14km line, which is mostly elevated (10km) and
partly underground (5km) and comprises of 12 stations (nine elevated and three
underground).
Table 35: Total opportunity from Patna Metro:

Systems 0 0 20 0 0 20
Total 30 30 47 0 0 107

Future phases include a 13km line from Mithapur to Didarganj and a 11km line from Bypass
Chowk to Kurji. These are in the conceptual stage as of now and therefore, have not been
considered for our analysis.
Guwahati Metro
Guwahati Metro is a proposed system spanning 65km with a total estimated cost of
~INR180bn. This project has been approved by the state government and is currently
awaiting the Centre’s approval. It consists of four corridors:
 Line 1: Dharapur to Narangi – This is a 27km elevated line with 22 stations
 Line 2: MG Road to Khanapara – This is a 10km underground line with 10 stations
 Line 3: Jalukbari to Khanapara – This is a 19km elevated line with 14 stations
 Line 4: ISBT to Paltanbazar – This is a 9km elevated line with 8 stations
Table 36: Total opportunity from Guwahati Metro

Systems 0 0 0 27 0 27
Total 0 41 41 63 0 144
Surat Metro
Surat Metro is a 40km partly underground metro system with a total estimated cost of
~INR120bn. This project has been approved by the Union cabinet and consists of two lines:
 Line 1: Sarthana to Dream City – This is a 22km line comprising of an underground
section of 6km and an elevated corridor of 15km connecting 20 metro stations
 Line 2: Saroli to Bhesan – This is a 9km completely elevated corridor that will connect
18 Metro stations.
Table 37: Total opportunity from Surat Metro:

Systems 0 0 0 18 0 18
Total 0 27 27 42 0 96
Other Cities
Apart from the cities mentioned above where the development of metro network is
planned or already underway, there are multiple cities where rapid transit systems have
been proposed, and either feasibility studies are proposed to be done/are underway or the
DPR is being prepared. These cities include Gorakhpur, Nashik, Vijaywada, Vizag,
Coimbatore, Jabalpur, Gwalior, Srinagar, Bareili, Prayagraj, Ranchi, Dehradun etc. Therefore,
there is significant opportunity going ahead as these plans come to fruition.

Sector Update
Future outlook: Bright future for metro projects in India

We believe, going ahead, many more cities are likely to get a metro network. The central
government’s support for a metro network has come as a shot in the arm for the
development of metro work in many new cities. However, the pace of progress will be
decided by the financial position of central and state governments, ability to manage
regulatory issues like land acquisition and utility shifting (something which has already
delayed some of the existing projects) and the overall planning approach.

Edelweiss Securities Limited, Edelweiss House, off C.S.T. Road, Kalina, Mumbai – 400 098.
Board: (91-22) 4009 4400, Email: research@edelweissfin.com
ADITYA
Digitally signed by ADITYA NARAIN
DN: c=IN, o=EDELWEISS SECURITIES LIMITED,
Aditya Narain ou=HEAD RESEARCH, cn=ADITYA NARAIN,
serialNumber=e0576796072ad1a3266c27990
f20bf0213f69235fc3f1bcd0fa1c30092792c20,
Head of Research
NARAIN
postalCode=400005,
2.5.4.20=6b7d777d3c8c77e0e2c454e91543f9
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aditya.narain@edelweissfin.com st=Maharashtra
Date: 2019.05.06 18:20:07 +05'30'
Coverage group(s) of stocks by primary analyst(s): Infrastructure - Construction

Ahluwalia Contracts, Ashoka Buildcon, Capacit’e Infraprojects Limited, Hindustan Construction Co., J Kumar Infraprojects, KNR Constructions, NBCC,
Nagarjuna Construction Co, PNC Infratech, Sadbhav Engineering, Simplex Infrastructures Ltd
Recent Research
Date Company Title Price (INR) Recos
15-Feb-19 Ahluwalia One-off quarter; order intake 261 Buy
Contracts surge continues;
Result Update
14-Feb-19 NBCC Subsidiaries drag margins; 49 Reduce
Result Update
13-Feb-19 J Kumar Strong performance 121 Under
Infraprojects continues; Result Update Review
Distribution of Ratings / Market Cap

Edelweiss Research Coverage Universe Rating Interpretation
Buy Hold Reduce Total Rating Expected to

Rating Distribution* 161 67 11 240 Buy appreciate more than 15% over a 12-month period
* 1stocks under review
Hold appreciate up to 15% over a 12-month period
> 50bn Between 10bn and 50 bn < 10bn
Reduce depreciate more than 5% over a 12-month period
Market Cap (INR) 156 62 11
All price charts cannot be included given the large number of companies in our coverage. Specific charts may be available upon request.

Sector Update
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Metro Rail

Buckle up for a Metrolution

Parvez Akhtar Qazi Aditya Chandrasekar

Metro Rail – Buckle up for a Metrolution

Metro rail: Panacea for urban traffic woes

Metro rail boom to generate ~INR2,500bn orders over FY20-24E

Outlook: Steaming ahead at full throttle

1 Edelweiss Securities Limited

The need for public transport in India

High vehicle ownership and low share of public transport

Vehicle ownership per 1000 population

Source: Government documents, Edelweiss research

2 Edelweiss Securities Limited

Chart 2: Share of public transport across countries

Share in transport (%)

Table 1: Desirable share of public transport (%)

Increasing congestion in all major cities

3 Edelweiss Securities Limited

Chart 3: Annual cost of congestion in Indian metros

Cost of congestion (USD bn)

Avoidable social cost of congestion (USD bn)

Transport is a major contributor to pollution

Chart 4: Sources of air pollution in India

4 Edelweiss Securities Limited

The way forward

Chart 5: Countries with the most number of operational metro systems

India has the second largest 32

Number of operational metro systems

5 Edelweiss Securities Limited

Metro Rail Policy 2017

6 Edelweiss Securities Limited

Recent developments on the policy front

7 Edelweiss Securities Limited

Status of metro projects in India

The current status of metro projects in various cities is given below:

Table 2: Status of metro projects in India

8 Edelweiss Securities Limited

Under construction metro projects in India

9 Edelweiss Securities Limited

Table 3: Status of metro projects across various cities

10 Edelweiss Securities Limited

Table 3: Status of metro projects across various cities (Contd…)

Indore Ph 1 32 75 Under construction Expected completion - 2024

11 Edelweiss Securities Limited

Source: Government documents, Edelweiss research

12 Edelweiss Securities Limited

Scope, extent of opportunities for service providers

We believe, service providers will be major beneficiaries of metro projects. Viability

13 Edelweiss Securities Limited

Table 4: Beneficiaries of major civil construction awards

Source: Government documents, Edelweiss research

14 Edelweiss Securities Limited

Table 5: Beneficiaries of major rolling stock awards

Table 6: Beneficiaries of major systems awards

15 Edelweiss Securities Limited

The government has stipulated the following mandatory conditions to be incorporated in

 To facilitate maintenance through easy availability of spares beyond the warranty

Further, to promote indigenous manufacturing, the government has stipulated procurement