Railway Stocks to Watch Out After Cabinet Nod to Rs 24,657 Crore Projects

The railway sector is making headlines this Monday as stocks of major public sector undertakings (PSUs) surge following the government’s green light for eight significant rail projects. The Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, recently approved these projects, with a total estimated cost of Rs 24,657 crore. This development has set the stage for a potential uptrend in railway stocks, particularly after a period of selling pressure that lasted over the past two weeks. Here’s a closer look at the key players in the railway sector and their market movements.

Rail Vikas Nigam Limited (RVNL) Leading the Pack

Among the railway stocks, Rail Vikas Nigam Limited (RVNL) is leading the charge. As of Monday, shares of RVNL have surged by as much as 6%, marking a rare instance of growth after a series of lackluster trading sessions. This is only the second time in the last nine trading days that the stock has posted gains. The uptick is largely attributed to the government’s approval of the new railway projects, which are expected to bolster RVNL’s revenue streams in the coming years.

RVNL, a key player in the railway infrastructure sector, had seen a sharp correction in its share price, falling nearly 20% from its all-time highs recorded earlier. Despite this correction, the stock has demonstrated remarkable resilience, with a staggering 330% increase over the past 12 months. The recent boost in RVNL’s stock price suggests renewed investor confidence, likely driven by the long-term growth prospects associated with the newly approved projects.

IRCON, IRFC, and RailTel: Gaining Momentum

While RVNL is stealing the spotlight, other railway PSUs are also experiencing positive momentum. Indian Railway Finance Corporation (IRFC) saw its shares rise by 2% on Monday. The company, which plays a pivotal role in financing the Indian Railways, is scheduled to announce its quarterly results later today, adding to the buzz around the stock.

IRCON International Limited, another key player in the railway sector, is trading with modest gains. Although the stock corrected by about 15% from its mid-July peak, it appears to be stabilizing, likely buoyed by the overall positive sentiment in the railway sector.

RailTel Corporation of India Limited, which provides telecom services to the railway sector, has also posted gains of over 2% on Monday. Like its peers, RailTel had experienced a correction, with its stock price sliding 22% from its recent highs. The current uptick indicates a potential reversal, driven by the broader optimism in the sector.

The Impact of the Rs 24,657 Crore Projects

The approval of the Rs 24,657 crore railway projects is a significant milestone for the sector. These projects are designed to enhance logistical efficiency by connecting previously unlinked areas and improving transportation networks across the country. The anticipated outcomes include streamlined supply chains, reduced transportation costs, and accelerated economic growth, particularly in regions that have historically been underserved by the railway network.

Scheduled for completion by the financial year 2030-2031, these projects represent a long-term growth opportunity for railway PSUs. Investors are likely factoring in the potential revenue boosts and enhanced market positioning that these companies may achieve as a result of their involvement in these large-scale infrastructure projects.

Conclusion: A Promising Outlook for Railway Stocks

The recent approval of significant railway projects by the government has injected fresh energy into the sector, with key stocks like RVNL, IRFC, IRCON, and RailTel showing signs of recovery after a period of correction. While the journey ahead may involve some volatility, the long-term prospects for these railway PSUs appear promising, given the strategic importance of the approved projects.

Investors should keep a close watch on these stocks.

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.