Railway stocks IRFC, RVNL and 3 others gain up to 8.5% on policy continuity optimism
Railway PSU stocks extend winning streak with gains of up to 8.5%. Investors upbeat on policy continuity and railway modernisation efforts under BJP's third consecutive term.
Railway PSU stocks, which have gained status as high-wealth creators in a very short period of time, have once again embarked on a winning streak in recent sessions post the sharp correction witnessed on June 04, and the rally extends into today's trading activities with gains of up to 8.5% driven by multiple positive developments.
Leading the pack is RailTel Corp that has surged 8.5% in today's trading session, closely followed by Ircon International with an intraday gain of the same magnitude.
Similarly, IRFC and Rail Vikas Nigam have also witnessed solid increases of 4.2% and 4.3%, respectively, while IRCTC has recorded a gain of 4.2%.
With the BJP securing a third consecutive term in power (with the support of its allies), investors are buoyed by the prospects of policy continuity and ongoing economic reforms.
One significant area of emphasis for the government has been the rejuvenation of the railways. In the past decade, the government has undertaken extensive modernisation efforts within the Indian railway system.
Additionally, there has been a notable expansion of metro train networks across various cities, alongside the introduction of 'Vande Bharat' trains in 2019.
According to the Indian Railways 2023 book, Indian Railways plans to market semi-high-speed ‘Vande Bharat’ trains by 2025–26 to European, South American, and East Asian markets for exporting 'Made in India' trains.
Indian Railways is developing and creating technology in areas such as signaling and telecommunication, with 15,000 km being converted into automatic signaling and 37,000 km being fitted with ‘KAVACH’, the domestically developed Train Collision Avoidance System. In 2024–25, Railways’ capital expenditure is targeted at US$ 30.33 billion (Rs. 2.52 lakh crore).
These initiatives reflect the government's commitment to enhancing the efficiency and reach of the country's transportation infrastructure.
Meanwhile, Ashwini Vaishnaw resumed his role as Minister of Railways for the second time under the leadership of Prime Minister Narendra Modi on Tuesday morning.
This reinstatement has sparked optimism among investors, as during his tenure, the railways witnessed significant modernisation and expansion of India's railway network. Vaishnaw has been assigned portfolios as Minister of Information and Broadcasting, and Minister of Electronics and Information Technology, apart from the Railways.
Companies within the railway ecosystem secured substantial orders in recent years, leading investors to express optimism towards the railway sector. This optimism stems from the sector's clear earnings visibility and the significant capital expenditure plans outlined by Indian Railways.
On Monday, the Siemens-RVNL Consortium received a 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 Phases 2A and 2B.”
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The total worth of this order is ₹394 crore, according to the RVNL exchange filing.
Disclaimer: We advise investors to check with certified experts before taking any investment decisions.
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