Bullet Train Pact Sends Shares of India Power-Gear Maker Soaring

  • Bharat Heavy jumps as much as 10.2%, Kawasaki up 1.7%
  • PMs Modi, Abe unveil India’s first bullet train project

Narendra Modi, India's prime minister, center, and Shinzo Abe, Japan's prime minister, right, shake hands in front of an E5 series Shinkansen bullet train during a visit to a plant of Kawasaki Heavy Industries Ltd.'s Rolling Stock Co. in Kobe, Hyogo Prefecture, Japan, on Saturday, Nov. 12, 2016. Modi meets Abe in Japan, almost a year after the Indian leader picked Japan as a partner for the nation's first line -- a 980-billion-rupee ($15 billion) rail linking Mumbai and Ahmedabad, roughly the distance from Paris to London. Abe hopes that will make Japan the front-runner if India implements five other planned lines.

Photographer: Buddhika Weerasinghe/Bloomberg

Bharat Heavy Electricals Ltd. jumped the most in a year after Japanese Prime Minister Shinzo Abe said the Indian power-equipment maker would partner with Kawasaki Heavy Industries Ltd. to make rolling stock for the South Asian nation’s first bullet-train project.

“If Japan’s high-end technology and India’s capable human resources partner, then India can become the factory of the world,” Abe said in a speech in the western Indian city of Ahmedabad on Thursday, announcing the tie-up between the two firms.

For details of the project, click here

The $17 billion project is an opportunity for BHEL, which has been battling slowing orders and pricing competition in India’s power generation equipment business. The country’s financially weak power retailers have been unable to distribute all the electricity the nation can produce, leaving power stations under-utilized and stalling new investments.

BHEL rose as much as 10.2 percent to 145.85 rupees, the biggest gain since Sept. 7, 2016. The shares traded at 142.80 rupees as of 12:30 p.m. in Mumbai, while Kawasaki Heavy was up 1.7 percent.

Earlier on Thursday, Indian Prime Minister Narendra Modi and Abe formally inaugurated the project that will link the financial capital of Mumbai to the economic hub of Ahmedabad. The 316-mile line is expected to start operations in 2023. Japan has said it will fund 81 percent of the costs.

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