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Published: September 17, 2024
Updated: September 17, 2024

Railway Stocks Surge as FM Nirmala Sitharaman Pushes Capex Plans and Vande Bharat Upgrade

Capex Review Sparks Focus on Railway Sector

Railway stocks are expected to draw significant attention following a capex review meeting chaired by Finance Minister Nirmala Sitharaman. During the second meeting in New Delhi, the Finance Minister urged the Ministry of Railways to expedite capital expenditure projects for the fiscal year 2024-25. A major focus was placed on the conversion of 40,000 standard rail bogies to Vande Bharat standards, an initiative announced in the Interim Budget for 2024-25.

Pushing for Timely Execution of Capex Targets

Sitharaman directed railway officials to ensure that capex targets for FY 2024-25 are met in a timely manner, continuing the progress achieved in the first 100 days of the Modi government's new term. Officials from the Ministry of Railways assured the Finance Minister that the Kavach safety system implementation is already underway, with work progressing over 3,000 route kilometres on key routes such as Delhi-Howrah and Delhi-Mumbai.

Focus on Efficiency: Economic Railway Corridors

To improve logistical efficiency and reduce costs associated with rail transportation, the government has planned three Economic Railway Corridors under the PM Gati Shakti initiative. These corridors will facilitate multi-modal connectivity in critical sectors such as energy, minerals, cement, and ports. A total of 434 railway projects, spanning 40,900 km, have been identified under these corridors, with an estimated investment of Rs 11.16 lakh crore. Of these, 55 projects covering 5,723 km with an investment plan of Rs 1.03 lakh crore have already been sanctioned.

Capital Allocation and Priorities for FY25

In the railway sector, the capital allocation for FY25 has been set at Rs 2.55 lakh crore, higher than the revised estimate of Rs 2.4 lakh crore for FY24. A significant portion of the budget, around Rs 1.3 lakh crore, has been earmarked for the procurement of rolling stock, construction of new railway lines, doubling of existing tracks, track renewals, and electrification. These developments are seen as positive drivers for several companies in the engineering, procurement, and construction (EPC) sector, including KEC International, Larsen & Toubro (L&T), Siemens, RVNL, IRCON International, BEML, Titagarh Rail, and Texmaco.

The Finance Minister’s emphasis on the timely execution of capital projects and modernization efforts, particularly the conversion of rail bogies to Vande Bharat standards, signals a major push towards enhancing railway infrastructure. This is expected to benefit the broader railway and related EPC sectors, driving both stock market interest and long-term growth in India’s rail transportation network.