Railway stocks IRCON International, RVNL shares jump up to 12% on merger reports

IRCON International share price jumped over 12%, while Rail Vikas Nigam (RVNL) share price surged over 6% on Friday despite weak trend on Dalal Street. The rally in these railway stocks came after reports that the government was considering a proposal to merge the two PSU companies.

IRCON International shares rallied as much as 12.13% to ₹150.15 apiece, and RVNL stock price gained 6.58% to ₹298.55 apiece on the BSE.

The Ministry of Railways has moved a formal proposal to merge IRCON International with Rail Vikas Nigam Limited (RVNL), online news portal PSU Connect reported, citing official sources.

If approved, the proposed merger will bring together two prominent railway PSUs under a single umbrella, potentially creating a large entity.

The proposal by the Ministry of Railways will undergo a standard review process, which includes approvals from the Ministry of Finance, the Department of Public Enterprises and the Cabinet Committee on Economic Affairs (CCEA).

According to the report, the proposed merger is aimed at forming a unified entity that brings together specialised expertise, enhances execution capacity by leveraging RVNL’s project management capabilities and IRCON’s strength in turnkey railway construction, and boosts global presence and operational efficiency.

Livemint could not independently verify the report.

As both IRCON and RVNL are listed on the BSE and NSE, the proposed merger is expected to be executed through a share-swap arrangement for shareholders of the two PSU firms.

IRCON, RVNL Share Price Outlook

IRCON share price has fallen 3% in one month, and has dropped 17% on a year-to-date (YTD) basis. The PSU railway stock has declined 12% in six months and has fallen 33% in two years. However, the PSU stock has delivered multibagger returns of 228% over the past five years.

RNL share price has declined 8% in one month and 20% on a YTD basis. The PSU railway stock stock has fallen 12% in six months and declined 15% in one year. RVNL stock price has jumped by a staggering 814% over the past five years.

“Some railway stocks have seen a sharp pullback move in today’s session with good volumes. Technically, post the recent correction the momentum readings were quite oversold and hence, we are witnessing a pullback move. However, it is too early to conclude if the worst is over as a trend reversal would require follow up buying as well,” said Ruchit Jain, Head, Equity Technical Research, Wealth Management, Motilal Oswal Financial Services Ltd.

He advises traders with existing positions in stocks like RVNL and IRCON to hold on to their existing positions while one can reassess the charts next week to see the follow up interest for fresh investments.

At 12:30 AM, IRCON International share price was trading 10.38% higher at ₹147.80 apiece, while RVNL share price was up 2.70% at ₹287.65 apiece on the BSE.

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