News

Published: July 9, 2024
Updated: July 9, 2024

Rail Stocks Surge: RVNL, IRFC, TexRail Climb Up to 15%

Market Rally in Rail Stocks

On July 8, shares of railway-related companies saw significant gains, surging up to 15% in intra-day trading on the BSE. This rise comes amid heavy volumes, with stocks like Rail Vikas Nigam (RVNL), Indian Railway Finance Corporation (IRFC), IRCON International, BEML, RailTel Corporation of India, and Texmaco Rail & Engineering (TexRail) leading the charge. Over the past two days, these stocks have seen increases ranging from 15% to 36%, in contrast to a 0.11% decline in the BSE Sensex.

Government Focus on Railway Infrastructure

The rally in railway stocks is attributed to reports suggesting a potential increase in budget allocation for the sector in the upcoming Union Budget on July 23. Minister for Railways Ashwini Vaishnav recently announced plans for 2,500 new general passenger coaches and 10,000 additional coaches, further boosting investor confidence. The government is committed to enhancing railway infrastructure, with budgetary allocations for railway projects increasing to Rs 2.55 trillion for 2024-25 from Rs 2.40 trillion the previous year.

Performance of Individual Stocks

RVNL:

Shares of the state-owned Rail Vikas Nigam Ltd (RVNL) hit a new high of Rs 567.60, surging 15% in intra-day trade on July 8. The stock has risen 36% over the past two days, driven by doubled trading volumes.

IRFC:

Shares of Indian Railway Finance Corporation (IRFC) reached a record high of Rs 206, gaining 6% with a fourfold increase in average trading volumes. The stock has rebounded 36% from its June 4 level of Rs 151.20.

TexRail:

Shares of Texmaco Rail & Engineering climbed 8% to a new high of Rs 295.65 on the BSE. Over the past two days, the stock has increased by 16%.

RVNL's Growth and Opportunities

RVNL is actively engaged in implementing various rail infrastructure projects assigned by the Ministry of Railways, including track doubling, gauge conversion, new lines, and electrification. The company's growth as a major provider of rail infrastructure presents opportunities for securing projects both domestically and overseas.

IRFC's Strategic Role and Support

IRFC plays a critical role in supporting the Indian Railways Infrastructure Development Plan, serving as the primary market borrowing arm for Indian Railways to meet extra-budgetary resource requirements for capital expenditure. S&P Global Ratings recently revised its rating outlook on IRFC to positive from stable, reflecting the company's integral link with the government and its strategic importance.

TexRail's Market Position and Order Book

Texmaco Rail & Engineering has a diverse product portfolio, including wagons, bridges, and steel castings, with a presence in both domestic and international markets. As of April 1, 2024, TexRail had a robust order book position of Rs 7,878 crore, comprising orders from Indian Railways and private sector companies. The company's large manufacturing capacity positions it well to capitalize on growing demand for wagons.

The recent rally in railway stocks highlights the market's optimism about the sector's future, driven by increased government focus and budget allocation. With strong order books and strategic importance, companies like RVNL, IRFC, and TexRail are poised to benefit from ongoing investments in railway infrastructure.