RVNL, IRFC to IRCTC: Railway stocks rise up to 12%. Which stock to buy today?

Railway stocks continued to rise on Friday, December 26, extending their rally to the fifth straight session. The rally in railway stocks followed the implementation of the government’s revised passenger train fares. Moreover, a mix of pre-Budget positioning, optimism around policy measures, and fresh sector rotation is also driving investor interest in the railway pack.

RVNL stood among the biggest gainers as the railway stock rallied 12.30% to ₹388.20 on Friday. Meanwhile, RailTel and IRFC shares surged up to 9%. IRCTC share price also rose nearly 5% to ₹704 apiece.

What's behind the rally?

A major catalyst for today’s movement is a growing optimism ahead of the Union Budget 2026. Railway stocks typically attract buying interest in the run-up to the Budget, as investors factor in the likelihood of increased capital spending on infrastructure, rolling stock, and network upgrades.

Following a subdued performance in 2025, investors seem to be re-entering railway stocks, wagering that the government will maintain railways as a key focus of its broader infrastructure development agenda.

The recent rationalisation in railway passenger fares has further buoyed sentiment, with even marginal increases being welcomed by markets as they point to better revenue visibility across the railways ecosystem.

Companies like IRCTC, which earn from ticketing volumes, catering, and ancillary services, are viewed as indirect beneficiaries of improved passenger economics—helping in the stock’s movement despite its otherwise defensive business profile.

“Indian railway stocks are rising as investors are factoring higher record budgetary allocations to Railways, and faster execution of projects like station redevelopment, electrification, Vande Bharat trains and dedicated freight corridors in the coming few quarters,” said Prashanth Tapse, Sr. VP Research analyst at Mehta Equities.

Tapse explained that strong improvement in order inflows, increasing revenue visibility, improved delivery and execution, operating leverage, and balance-sheet strength of key railway PSUs are supporting earnings upgrades, while structural policy continuity to push and improve long-term return expectations can lead to long-term re-rating for the sector.

Which railway stock to buy amid ongoing rally?

Amid an ongoing rally in the railway stocks, Tapse recommended investors to buy IRFC stock with a target price of ₹145 / ₹158, saying that the PSU company presents a compelling infrastructure-finance proxy for investors looking to participate in India’s multi-year railway expansion and modernisation cycle.

“As the dedicated financing arm of Indian Railways, one of the world’s largest rail networks, IRFC is a direct beneficiary of sustained government capex on rolling stock, electrification, freight corridors, and capacity augmentation. The company’s AAA credit ratings and sovereign-linked borrower profile translate into near-zero credit risk, highly predictable cash flows, and strong asset quality, making its business model structurally stable across market cycles. This unique positioning offers investors low-risk exposure to the railways theme, supported by steady annuity-like earnings and potential valuation re-rating as financing volumes and execution momentum improve,” Tapse added.

On the other hand, Drumil Vithlani, Technical Research Analyst at Bonanza, has suggested that investors look at RailTel Corp, saying that the stock has given a breakout from a Falling Wedge pattern on the daily timeframe, indicating a short-term bullish bias.

“The structure remains constructive with short-term strength already visible on daily charts, while a confirmed weekly breakout could open the door for a broader medium-term move. Additionally, volume expansion during the daily breakout highlights strong buyer participation and willingness to accumulate the stock at higher levels,” Vithlani said.

Disclaimer: This story is for educational purposes only. Please consult with an investment advisor before making any investment decisions.