Why HBL Power Systems share price rallied over 12% today? Explained

Shares of HBL Power Systems rallied more than 12 per cent to hit a 52-week high of ₹139.40 on the BSE during Tuesday's session, continuing its rally over the optimism of Kavach system as the government plans to expedite its wide-scale adoption across the Indian Railways network. In the past two trading days, the stock of the auto components and equipment company has surged almost 19 per cent. HBL was also among the top gainers on stock exchanges BSE and NSE today.

The stock prices of anti-collision device makers have witnessed a surge in the past few sessions on the growing optimism surrounding the potential deployment of the Kavach system, an automatic train protection system, following the recent Odisha train tragedy. 

Also Read: HBL Power share price surges 10%, Kernex Microsystems hits 5% upper circuit as Govt plans to expedite Kavach adoption

HBL Power specializes in developing and manufacturing products and solutions for telecom, industrial, railways and defence applications. The company is a leading player in the transport-related equipment and services sector, which makes it one of the dominant candidates for bagging government contracts related to the Kavach system.

Kavach was introduced as part of the Atmanirbhar Bharat initiative in Budget 2022 and works by automatically applying the brakes if the loco pilot fails to do so, which helps in preventing accidents. The system has been designed to assist locomotive pilots in avoiding Signal Passing At Danger (SPAD) and overspeeding. The government had announced their plan to deploy Kavach over 34,368 km of track, covering high density and highly utilised routes, targeting the completion of this plan by 2026.

The Odisha train derailment tragedy has pushed Indian Railways to prioritise contracts for the system's implementation alongside the block signaling and the centralised traffic control systems on the busy routes. The train tragedy involved a collision between the Bengaluru-Howrah Superfast Express, the Shalimar-Chennai Central Coromandel Express, carrying as many as 2,500 passengers and a goods train. 

The accident occurred when the Shalimar-Chennai Central Coromandel Express, bound for Chennai, derailed and collided with a goods train on the adjacent track. The Bengaluru-Howrah Superfast Express, traveling from the opposite direction on the third track, collided with the derailed coaches. So far, the death toll in the Odisha train crash has risen to 278 as three more people succumbed to their injuries, according to Railway Ministry data.

On June 6, shares of HBL Power settled 12.11 per cent higher to ₹135.60 apiece on the BSE. The company has a total of seven fully integrated facilities manufacture batteries, electronics and engineered products based on in-house developed technologies.