Railway Stocks in Focus: RailTel and IRCON Bagged Substantial Orders

India has the fourth-largest railway network in the world as of December 2023, with around 22,593 trains in operation (9,141 freight and 13,452 passengers), 24 million passengers each day, and 203.88 million tonnes of freight. The Indian railway sector has been chugging along steadily, and recent developments suggest it might be picking up steam.

Two key players, RailTel and IRCON, witnessed a significant rise in their stock prices on March 18th, 2024, after securing substantial orders. The share price of RailTel Corporation of India Ltd opened at ₹369.40 and touched a day high of ₹378.00, while IRCON opened at ₹221.75 and recorded a day high of ₹223.65 at 2:45 PM.

Let’s delve into the details and explore what this might mean for the future of these companies and the railway sector as a whole.

RailTel’s Tech Savvy Gains Traction

RailTel, a public sector undertaking known for providing railway telecom and infotainment services, bagged orders of ₹1,30,60,27,856 (Including Tax) and ₹3,51,95,23,654 (Excluding GST) from the Bihar Educational Project Council and the Municipal Corporation of Greater Mumbai, respectively. This diversification in clientele highlights RailTel’s ability to cater to a broader range of needs beyond the traditional railway domain.

IRCON Received an Order From NHIDCL

IRCON International Limited, another prominent player in the railway infrastructure space, received a sizeable order worth ₹630.66 crore from the National Highways and Infrastructure Development Corporation Ltd (NHIDCL). This contract pertains to a road project showcasing IRCON’s diversification beyond just railways.

Despite not being directly related to railways, the order win instilled investor confidence in IRCON’s project execution capabilities. The company’s stock price jumped by over 3% following the announcement.

Reasons for Optimism

The recent order wins for RailTel and IRCON paint a positive picture for the Indian railway sector.

• Increased Government Focus: The Indian government has placed significant emphasis on developing and modernising the railway infrastructure. This translates to potential opportunities for companies like RailTel and IRCON.
• Digitalisation Push: RailTel’s expertise in digital solutions positions them to play a crucial role in the government’s digitalisation initiatives within the railways and beyond.
• Infrastructure Development: IRCON’s proven track record and diversification strategy can benefit from the government’s focus on overall infrastructure development, not just limited to railways.

Conclusion

The order wins for RailTel and IRCON signal positive developments for the Indian railway sector and its associated companies. These events highlight the potential for growth in the areas of digitalisation, infrastructure development, and diversification.

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.