Budget 2022: Indian Railways get significant chunk in government’s capex; know analysts view on IRCTC, IRFC stocks in focus

The finance minister Nirmala Sitharaman have made a slew of announcements for railways, with an aim to increase the productivity and commute of the common man. In this regard, the government has increased overall capital expenditure by 35 per cent for FY23, which includes railways too. 

Several analysts believe growth perspective approach towards overall infrastructure development, including railways is positive. They opine, this shows the intent of the government towards growing railways, which is likely to benefit the sector in many ways. 

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Nirmala Sitharaman in her Budget speech has said, “Railways will develop new products and efficient logistic facilities for small farmers and Small and Medium Enterprises. Besides, ‘One Station-One Product’ will be promoted to help local businesses and supply chains.” 

400 new generation Vande Bharat Trains will be launched to improve passenger experience along with better energy efficiency will be launched in next 3 years, she also said in her budget speech. 

Analysts at HEM Securities believe, “The government has shown its intent towards growing the railways, this is likely to benefit in multiple ways in the longer run. It also allocated record sum to railway infra last year; major benefits of these developments will be the reduction in logistics cost.” 

“The Budget has given a special impetus to private sector capex, which is muted since the past 6-7 years. Ordering activities in roads, urban infrastructure, healthcare, railways are expected to pick up significantly in the next few years,” Reliance Securities said in Budget preview. 

“The Union Budget for FY23 focused on the Gati Shakti Mission through which the government plans to provide significant thrust to the infrastructure development, which includes impetus to the Roads, Railways, Airways, Ports among others for development”, Axis Securities also mentioned. 

Majority of the analysts believe, not just railways related stocks but other infra stocks may also have positive impact as the government aims to take up most of the infra work, including railways, in public-private partnership module. 

With announcement of additional 400 new-gen Vande Bharat trains, it may have direct benefit to Indian Railway Catering and Tourism Corporation, and same to other railway stocks such as Rail Vikas Nigam Limited, Ircon International, Indian Railway Finance Corporation among others.