IRCTC to IRFC: Should you buy Indian Railway stocks ahead of Budget 2025?
As Union Budget 2025 approaches, investors are weighing the potential of Indian railway stocks like IRCTC, IRFC, RVNL and Railtel. Could this be the right moment to jump into railway investments?
Railway stocks: With the Union Budget 2025 just a month away, investors seem cautious, contemplating whether this is the right time to invest in Indian railway stocks like Indian Railway Catering and Tourism Corporation (IRCTC), Indian Railway Finance Corporation (IRFC), Rail Vikas Nigam (RVNL) and Railtel Corporation Of India.
IRCTC, IRFC, RVNL, Railtel share price trend
Several railway stocks have been on a downhill slope for the last few months.
On a monthly scale, IRCTC's share price has been in the red since May this year. IRFC's share price and Railtel's share price have been declining since August.
RVNL's share price has been falling since September.
Is it the right time to buy Indian Railway stocks?
The Indian railway sector is expected to receive a boost from the Union Budget 2025, especially in terms of modernising railway infrastructure amid growing passenger demands.
As per a Mint report, Indian Railways is actively implementing various technological upgrades to its passenger services.
Experts believe the government's increased budget on railway modernisation could infuse fresh momentum in railway stocks.
According to Mahesh M Ojha, AVP of research at Hensex Securities, the upcoming Union Budget is expected to remain infra-oriented. Hence, railway stocks are one of those segments that will benefit from such budgetary allocations.
However, Ojha added that most railway stocks have limited upside possibilities due to the limited possibility of CAPEX expansion. So, one should buy stock for the short term and avoid any medium or long-term.
"Rail Vikas Nigam (RVNL) and Railtel Corporation Of India stocks are looking better ahead of the budget for 2025," said Ojha.
Manish Chowdhury, the head of research at StoxBox, observed that after the correction in railway stocks over the past few months, the risk-reward looks favourable for these stocks from a short to medium perspective, especially considering the upcoming Union Budget in February 2025.
"With the General Election and few important state elections behind us, our sense is that the execution on the ground would gather steam (Kavach, Vande Bharat network expansion, bullet and metro train execution) and would not be surprised to see a higher railways CAPEX allotment in the Budget," said Chowdhury.
"Considering a decent set of numbers from railway companies in Q2FY25, we believe that IRFC, Railtel and RVNL can be added from a one-year horizon as industry tailwinds and improved on-ground execution could act as key catalysts going ahead," Chowdhury said.
However, looking at railway stocks just in the context of the upcoming budget could be wrong.
Some experts point out that the recent fall in railway stocks was caused by weak quarterly earnings, and they may not see renewed momentum unless their earnings will improve.
"In Q1 and Q2, many railway stocks failed to deliver margin, top-line and bottom-line growth. We are not positive about railway stocks at this juncture. We will wait for Q3 earnings," said Prashanth Tapse, Senior VP (Research) at Mehta Equities.
Tapse added that the Indian government is fully focused on improving railway infrastructure and will not wait for the Budget to make any announcements. They make new announcements every quarter, so the upcoming budget may not be a big trigger for railway stocks, said Mehta.
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Disclaimer: The views and recommendations above are those of individual analysts, experts, and brokerage firms, not Mint. We advise investors to consult certified experts before making any investment decisions.
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