Boost To Railway Infra Witnesses Boom In Rail Related Shares

The Centre’s push to high speed trains in India is adding gears to the stocks of railway related companies too. According to market experts, stocks of companies like Indian Railway Finance Corporation, Rail Vikas Nigam, RITES and Titagarh Wagons have been witnessing a boom following the Indian government’s boost to the railway infrastructure and passenger facilities in India. 

The biggest gainer with this trend is the Rail Vikas Nigam or RVNL. An Indian central public sector enterprise which works as the construction arm of the Ministry of Railways for project implementation and transportation infrastructure development, RVNL has seen a whopping growth of 333.87 per cent in the last one year, giving good returns to investors. 

Similarly, RITES which was earlier known as Rail India Technical and Economic Service too has seen its shares growing at 91.87 per cent in the last one year. As per its official website, RITES is the only export arm of Indian Railways for providing rolling stock except Thailand, Malaysia, and Indonesia.

Indian Railway Finance Corporation saw a gain of 69.93 per cent in the last one year. Selling at Rs 34.90 in the Monday trading session, it has been a bit volatile yet experts say that the corporation has some big deals underway and a strong financial position, making it a safe bet. 

On Monday, the Titagarh Rail Systems jumped 3.02 per cent and closed at Rs 633.80. The last one year has seen this stock growing at 35.60 per cent. Titagarh Rail Systems has reported a rise in net profit to Rs 6,178 lakhs for the June quarter of FY24. Other railway stocks that have seen a growth include Indian Railway Catering & Tourism Corporation with 3.33 per cent, Container Corporation of India with 1.38 per cent in last one year and BEML with 16.29 per cent.

Talking about the trend, Aamar Deo Singh, Head Advisory, Angel One said, “As a result of the government's push for infrastructure, railway stocks have provided excellent returns to investors, with RITES up 44 per cent year to date, RVNL up 113 per cent year to date, IRCON up 63 per cent year to date, RailTel up 30 per cent year to date, and BEML up 22 per cent year to date. Investors are urged to trail the remaining shares and record a portion of their profits as these equities may see tumultuous sessions in the coming days.”

Santosh Meena, Head of Research at Swastika Investmart said, “The railway sector is experiencing a significant boost, primarily driven by substantial capital expenditure (capex) investments. Companies within the sector are consistently securing major orders, setting the stage for promising earnings ahead. Furthermore, recent accidents have underscored the urgent need for increased investment in this industry, further fueling demand for infrastructure enhancements and safety measures.”

Meena added that in response to the growing demand from low-income passengers and migrant workers, Indian Railways is contemplating the introduction of more non-AC general category trains between major cities. “This move is aimed at better catering to the needs of these specific demographics and easing their travel experience. Historically, such trains have been predominantly operated during the festival season, but expanding their availability can have a positive impact on accessibility and inclusivity throughout the year.”