Best Railway Stocks in India Based on 5Y-CAGR

The Indian railway industry boasts a long and storied history, serving as the backbone of the nation’s transportation network. The railway sector is crucial for the country’s transportation needs and has government backing. The Indian government prioritises railway development, injecting funds into infrastructure projects. This translates to potential growth for railway companies as they expand and upgrade services. But for investors, the railways offer more than just a scenic journey – they represent a potentially lucrative investment opportunity.

Railways are an essential service, ensuring a steady revenue stream for the companies that operate them. This stability is attractive to investors seeking predictable returns. Let us now look at the top railway stocks in India based on 5-year CAGR.

Top Railway Stocks in India Based on 5 Yr CAGR

Note: The stocks have been selected from the Nifty 500 universe and sorted on the basis of 5-year CAGR as of June 13, 2024.

1. Jupiter Wagons Ltd: Jupiter Wagons manufactures metal fabrications, including load bodies for commercial vehicles, rail freight wagons, and components. The record continued growth in Q4 FY24, with a Total Income of ₹1,12,134 lakh, growing 57% YoY. EBITDA soared to ₹ 14,772 lakh, exhibiting substantial growth of 59% YoY, accompanied by an industry-leading EBITDA margin of 13.3% in Q4 FY24.

2. Titagarh Rail Systems Ltd: Titagarh Rail Systems Ltd manufactures and sells Freight Wagons, Passenger Coaches, Metro Trains, Train Electricals, Steel Castings, Specialised Equipment and bridges, Ships, etc. The company recorded the industry’s highest-ever monthly wagon production: 1,089 in March 2024 and 2,700 for Q4FY24. As of March 31, 2024, the company’s share of the order book in the Joint ventures stood at ₹13,326 crore.

3. Rail Vikas Nigam Ltd: Rail Vikas Nigam Ltd implements various types of Rail infrastructure projects assigned by MoR, including doubling, gauge conversion, new lines, railway electrification, major bridges, etc. Recently, Siemens-RVNL Consortium has received Letter of Acceptance from Bangalore Metro Rail Corporation Ltd for ” Engineering, Supply, Erection, Testing and Commissioning of 33 KV Distribution, 750V DC Third Rail Traction Electrification including Traction Substations, Auxiliary Substations and SCADA System for Phase-2A & Phase 2 B.

4. Ramkrishna Forgings Ltd: Ramkrishna Forgings Ltd is mainly engaged in manufacturing and selling forged components for automobiles, railway wagons and coaches, and engineering parts. During Q4 FY2024, it successfully secured a notable ₹270 crore order for the Vande Bharat Train Set, a pivotal achievement in our ongoing rail infrastructure development efforts.

5. BEML Ltd: BEML manufactures a wide range of heavy earthmoving equipment for the mining and construction industry, vehicles for the defence forces, and coaches for the metro and Indian Railways. During FY24, the company secured an order worth ₹3,200 crore for the supply of Metro cars from BMRCL. The trial run of company-made metro coaches commenced through India’s first underwater river tunnel at Howrah.

Overview of the Railway Sector

The Indian railway system is regarded as the country’s economic backbone and lifeblood. India’s railway network is considered one of the world’s largest under a single management. In FY 2022-23, Indian Railways achieved 1,512 MT of freight, 94 MT more than the previous peak of 1,418 MT in FY 2021-22, representing a 7% increase, and generated income of US$ 19.28 billion (₹1,60,158 crore) from freight services.

The government is planning to introduce 3,000 new trains over the next 4 to 5 years to increase the railways’ current passenger capacity from 800 crore to 1,000 crore, with a focus on meeting the needs of the expanding population.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.