On track for growth: The unstoppable rise of railway stocks

The Indian railway sector presents a promising opportunity to participate in India’s growth story. Dive in to learn more!

The Indian economy sees the Indian railway system as its backbone. Fourth largest in the world, after China, the United States and Russia, the Indian railways cover practically every part of India with thousands of kilometres.

Railway stocks have experienced an incredible upward trend, making them a subject of interest to market analysts and investors. The boom in these stocks reflects how important the railway industry is to the Indian economy.

This article will examine why this upsurge has occurred, the major railway stocks list that should be monitored, and broader implications for investors.

Overview of railway stocks

Several key railway stocks in India have witnessed significant gains recently.

In anticipation of the budget, railway stocks are at an all-time high. While the union budget is scheduled to be presented on July 23, what factors are influencing railway stocks? At new highs, stocks of listed railway companies such as RVNL, IRCON International, IRFC and others are trading.

Railway stocks news – Reasons for the surge

There has been a surge in railway stocks as the rest of the market languished, mainly due to some recent announcements by Ashwini Vaishnaw, Minister for Railways. Here are some key factors driving this uptick:

New coaches and Amrit Bharat trains

    Minister Vaishnaw’s declaration of plans for 2,500 new conventional passenger coaches and 10,000 additional coaches has attracted investors. These additions should provide better train services and result in more revenue for railway companies.

    Also participating in this positive mood is the unveiling of 50 new Amrit Bharat trains with fast speed and luxury experiences. Moreover, Minister Vaishnaw announced that 3,000 new trains would be introduced in the next five years.

    Union budget expectations

      Investors are expecting the upcoming union budget to prioritise investment in rail infrastructure. The budget is expected to make provision for financial resources as well as policy initiatives to support rail investments and modernisation.

      Another reason for optimism is the continuous focus on infrastructure development by the government since 2014.

      Railway Infrastructure Outlook

        Towards union budget 2024, which is growth oriented being centred on energy sector power railways and other infrastructural segments, which part of the expectations from markets today

        Other government initiatives

        The Indian government has instituted several measures to improve performance in the railway sector, laying greater emphasis on modernisation, security and efficiency. The main ones are as follows:

        1. National Rail Plan (NRP) 2030: By 2030, this plan is expected to achieve a future-ready railways system aimed at promoting sustainable growth with a focus on a 45% share of railways in freight traffic.
        2. Mission Raftaar: This initiative seeks to increase the average speed of goods trains and that of passenger trains. Fifty Vande Bharat services have been introduced in India till 24th July 2023.
        3. Electrification of railways: The budget for Indian Railways is ₹6,500 crore in FY 2025, and this will be used to electrify them by 2030 with zero carbon emissions. As per estimates, it is believed carbon emissions would come down by around 24% by FY28 due to movement towards electric traction.

        Key railway stocks in focus

        Investing in railway stocks can provide exposure to a crucial sector of India’s infrastructure development. Let’s explore the railway stocks list with prices respectively:

        IRCTC (Indian Railway Catering and Tourism Corporation)

        IRCTC is a leading public sector enterprise under India’s Ministry of Railways, which has been classified as “Mini Ratna (Category-I)”. It came into existence on 27th September 1999, to enhance, streamline and operate the Indian Railways’ catering services, hotels and restaurants at stations, inside trains and other places, as well as to market domestic tourism and international travel via budget hotel development, unique tour packages, advertising campaigns or information brochures and worldwide reservation systems. 

        The company has given an astonishing return of 1,510.31% over the past 5 years as of July 11, 2024.

        Investing in railway stocks can provide exposure to a crucial sector of India's infrastructure development. Let’s explore the railway stocks list with prices respectively:

        Source: NSE

        RVNL (Rail Vikas Nigam Limited)

        RVNL boasts a remarkable legacy spanning more than two decades. Its inception was driven by the mission to bridge critical infrastructure gaps within the Indian Railways system. The company swiftly executed projects, focusing on expanding rail infrastructure capacity and securing extra-budgetary resources for special purpose vehicle (SPV) initiatives.

        The company has given an astonishing return of 2,311.07% over the past 5 years as of July 11, 2024.

        The Indian railway sector presents a promising opportunity to participate in India's growth story. Dive in to learn more!

        Source: NSE

        IRFC (Indian Railway Finance Corporation)

        The Indian Railway Finance Corporation (IRFC) was founded on December 12, 1986, to serve as the Indian Railway’s sole financing entity for obtaining funds from both domestic and foreign sources.

        IRFC has, in a time frame exceeding thirty years, been instrumental in realising the dream of expanding India’s rail network by providing funds that make up a substantial part of its annual plan allocation.

        The company has given an astonishing return of 692.12% over the past 5 years as of July 11, 2024.

        Railway stocks have experienced an incredible upward trend, making them a subject of interest to market analysts and investors. The boom in these stocks reflects how important the railway industry is to the Indian economy.
This article will examine why this upsurge has occurred, the major railway stocks list that should be monitored, and broader implications for investors.

        Source: NSE

        IRCON International

        IRCON International Limited (IRCON), is a government company founded by the Central Government (Ministry of Railways) under the Companies Act, 1956 on April 28, 1976. It is well-known for its performance, dedication, and consistency in the construction industry. 

        IRCON was first incorporated under the name Indian Railway Construction Company Limited as the primary public sector turnkey construction corporation. It operates in several states in India as well as a few other nations. The company has given an astonishing return of 728.76% over the past 5 years as of July 11, 2024.

        Investing in railway stocks can provide exposure to a crucial sector of India's infrastructure development. Let’s explore the railway stocks list with prices respectively

        Source: NSE

        Financial Performance

        (₹ crores)IRCTCRVNLIRFCIRCON
        Revenue4,27021,73326,64512,331
        Operating profit1,4661,34626,512924
        Net profit1,1111,4636,412930
        EPS13.897.024.919.88

        Source: Screener (as of March, 2024)

        Conclusion

        The immense surge in railway stocks depicts the increasing significance and future of the Indian railway sector in the country’s economy. The recent upward momentum experienced by these stock prices is indicative of governments’ strategic emphasis on revamping and expanding rail infrastructure.

        This impressive upswing in railway stocks highlights the criticality of this industry for India’s economic outlook. By keeping abreast with key developments and smartly investing in frontline rail stocks, investors can fully exploit the growth opportunities presented by this dynamic sector.

        DISCLAIMER: This article is not meant to be giving financial advice. Please seek a registered financial advisor for any investments.

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