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Analyzing GE Transportation’s India Order

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GE Transportation’s India order

General Electric (GE) Transportation made a key announcement at Berlin’s InnoTrans 2018 International Trade Fair on September 19. According to the announcement, Indian Railways gave General Electric’s 4,500-horsepower diesel-electric Evolution Series prototype locomotives the green light. GE Transportation announced that Indian Railways approved the locomotive after the testing and trials were complete.

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In 2015, GE Transportation signed a $2.5 billion agreement with India’s government. The deal was part of the government’s “Make in India” initiative under the Public Private Partnership model. Under the deal, General Electric was awarded a contract to supply 1,000 locomotives. The agreement also included setting up a new GE Transportation factory and maintenance sheds in India.

CNI’s new locomotive order

On September 5, GE Transportation announced that Canadian National Railway (CNI) ordered 60 additional locomotives. In December 2017, Canada’s number one rail carrier placed an order for 200 locomotives with GE Transportation. Canadian National Railway’s new order includes Tier 4 Evolution Series locomotives equipped with GE Transportation’s GoLINC Platform, Trip Optimizer System, and Distributed Power LOCOTROL eXpanded Architecture.

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In another development, Wabtec (WAB) filed a proxy statement with the SEC on September 17. The statement was regarding Wabtec’s proposed combination with GE Transportation. Wabtec expects its merger with GE Transportation to close in the first quarter of 2019. According to Wabtec, the combined entity is expected to have revenues of ~$8.0 billion and higher operating margins in 2019.

About XTN

If you’re bullish on the prospects of industrial sector stocks, you might consider investing in the First Trust Industrials/Producer Durables AlphaDEX Fund (FXR). FXR has a 1.79% of Wabtec (WAB), which has merged with GE Transportation. Among major industrial companies, FXR has a 1.97% weight on Eaton (ETN), 1.81% on Trinity Industries (TRN), and 1.37% on Textron (TXT).

Next, we’ll discuss how the US-China trade war might impact General Electric.

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