RVNL, RailTel, Titagarh Rail hit all-time high; railway stocks to continue to rally in FY25 say experts

Shares of railway stocks including the likes of Rail Vikas Nigam Limited (RVNL), RailTel Corporation and Titagarh Rail marked their fresh record highs in Monday’s trade (June 24) even as headline indices traded on a muted note.

Individually, RVNL rallied over 5 per cent to hit an all-time high of Rs 432 after emerging as the lowest bidder (L1) for the project from the SER HQ-ELECTRICAL/South Eastern Railway worth over Rs 191 crore. Over a 1-year period, shares of the railway company galloped over a whopping 243 per cent.

RailTel Corporation, meanwhile, climbed nearly 8 per cent, to hit an all-time high of Rs 513.25 continuing with the previous day’s traction.

Similarly, Texmaco Rail & Engineering witnessed an 8 per cent increase in share price along with a surge in trading volume. 

Primarily, the railway theme is buzzing of late on the back of strong government focus and moreover there is an anticipation of an increased outlay towards the sector in the upcoming Union Budget.

Experts view on Railway stocks

Prashanth Tapse Sr VP Research analyst at Mehta Equities believes the Railway theme would continue to rally this FY. The Government has placed strong focus on railways infrastructure and cabinet is on mission action mode to improve connectivity with modern tracks that can handle higher speed trains.

The expert further added that the upcoming budget may see a higher allocation of more than 50 per cent than the FY24 budget estimate which would give a healthy push to the companies which are into infrastructure services, like RVNL, IRCON and RITES. 

Atul Parakh, CEO of Bigul said rail stocks are reaching record highs fueled by a perfect storm of positive factors. Anticipation of increased government spending on rail infrastructure, particularly for electrification and multi-modal cargo terminals under PM GatiShakti, is boosting investor confidence in higher freight volumes and profitability for rail companies. This optimism is further validated by strong earnings reports from major players. The excitement extends beyond financials. 

As per reports next 5 years the govt will work on Vision 2047 under which it expects to add 100,000 km of new alignments, including some replacements, doubling and gauge conversion works over the next 25 years costing ₹15-20 trillion, noted Tapse.

While concerns about a potential economic slowdown remain, the outlook for rail stocks is currently positive, with developments in infrastructure spending, supply chain disruptions, and energy prices being key factors to watch in the coming months, added Parakh.

Which stocks to buy from the railways space?

Tapse said he likes RVNL which works as the construction arm of the Ministry of Railways for project implementation and transportation infrastructure development. As of now domestic order book is around Rs 65,000 crore (Approx. 3x to it FY2024 topline), which roughly constitutes 50 per cent from the nomination, that is the typical railway projects, and 50 per cent from the market. RVNL is also diversifying to other segments and eyeing many projects in the foreign countries.

We continue to remain optimistic on the sector as well on the stocks especially RVNL with a target of Rs 470-500 for next 12 months, added Tapse.