General Electric Company (NYSE:GE) announced it will invest $200 million to develop and supply Indian Railways with 1,000 diesel locomotives. The company received a Letter of Award from the Ministry of Railways for a locomotive supply and maintenance contract, worth approximately $2.6 billion over 11 years. The deal advances the ‘Make in India’ initiative and reinforces India’s position as a global manufacturing destination.
The largest deal in GE’s 100-year history in India, the company will build a diesel locomotive manufacturing facility in Marhowra district in the Indian state of Bihar, as well as maintenance sheds at Bhatinda in Punjab and Gandhidham in Gujarat. This effort is a major boost to India’s railway modernization efforts, and will provide skill development opportunities for local talent.
“This infrastructure project is further evidence of India’s position as a growth engine for Asia,” said GE Chairman and CEO Jeff Immelt. “It is a major advancement and milestone for India and for GE, and a symbol of our commitment and support of the ‘Make in India’ initiative.”
Last year, the Government of India allowed 100 percent Foreign Direct Investment (FDI) in the railway sector. The Marhowra diesel locomotive project marks one of the first major instances of FDI in enhancing India’s rail locomotive capacity.
“This project combines GE’s deep infrastructure and manufacturing expertise with India’s growth priorities. This is an exciting and integral part of our localization strategy in India,” said Jamie Miller, GE Transportation Chief Executive Officer. “We are excited about working with Indian Railways and continuing to invest in the region.”
The Letter of Award confirms GE as the selected bidder, following a competitive bidding process, for the project to develop a diesel locomotive manufacturing facility and deliver 1,000 diesel locomotives. GE will sign an agreement to formalize the contract and establish a joint venture with Indian Railways before breaking ground to construct the facility. (Original Source)
Shares of General Electric closed last Friday at $29.92. GE has a 1-year high of $29.95 and a 1-year low of $19.37. The stock’s 50-day moving average is $27.68 and its 200-day moving average is $26.48.
On the ratings front, General Electric has been the subject of a number of recent research reports. In a report issued on October 19, Stifel Nicolaus analyst Robert McCarthy reiterated a Buy rating on GE, with a price target of $30, which represents a slight upside potential from current levels. Separately, on the same day, UBS’s Shannon O’Callaghan reiterated a Buy rating on the stock and has a price target of $32.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Robert McCarthy and Shannon O’Callaghan have a total average return of 1.8% and 15.6% respectively. McCarthy has a success rate of 55.6% and is ranked #2015 out of 3829 analysts, while O’Callaghan has a success rate of 81.0% and is ranked #104.
Overall, 2 research analysts have assigned a Hold rating and 7 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $31.25 which is 4.4% above where the stock closed last Friday.