Business

IIE DIGITAL DESK : Railway-related stocks have surged significantly over the past week, with key players like Ircon International, RailTel Corporation of India, and Rail Vikas Nigam Limited (RVNL) recording gains of up to 15% in just five trading sessions. The sharp rally in these stocks has drawn the attention of retail and institutional investors alike, with optimism growing over government infrastructure spending, robust order books, and promising growth projections.

According to market analysts, the recent surge is being driven by a combination of positive macroeconomic signals and sector-specific developments. The Indian government’s continuing focus on modernising and expanding railway infrastructure has boosted investor sentiment in the sector. With a record allocation in the Union Budget for the railways and a pipeline of high-value infrastructure projects, stocks linked to railway engineering, telecom, and project development have become market favourites.

One of the biggest triggers for the rally has been the Ministry of Railways’ commitment to aggressive capital expenditure. The budget for FY25 includes a capital outlay of ₹2.55 lakh crore for Indian Railways—the highest ever. This includes projects focused on electrification, track doubling, station redevelopment, and the manufacturing of Vande Bharat and other semi-high-speed trains.

Ircon International, a public sector engineering and construction company under the Ministry of Railways, has seen its stock rally sharply on the back of large-scale project announcements and strong quarterly earnings. The company’s robust order book, which includes several international infrastructure projects in Bangladesh, Sri Lanka, and Nepal, has added to investor confidence.

RailTel, which provides telecom infrastructure services to Indian Railways, has also seen its stock price climb amid optimism over the increasing digitisation of the railway network. As the Railways invest heavily in automated signalling systems, real-time tracking, and Wi-Fi expansion across stations and trains, RailTel is expected to be a key beneficiary. Market participants believe that RailTel’s role in the Digital India initiative and ongoing collaborations with other PSUs will drive strong revenue growth in the coming quarters.

RVNL, another major railway PSU engaged in executing high-value rail infrastructure projects, has seen sustained buying interest after it was recently included in the MSCI India Smallcap Index—a move that typically draws foreign institutional investment. RVNL’s recent performance in securing key infrastructure tenders and its consistent execution track record have further fueled bullish sentiment.

In addition to these company-specific factors, broader market trends have also played a role in the rally. With growing anticipation around political continuity after the general elections and expectations of further economic reforms, infrastructure and capital goods stocks have been in focus. Railway stocks, due to their strategic importance and government ownership, have emerged as strong proxies for public sector-led growth.

Another element contributing to investor enthusiasm is the consistent dividend payouts and improving profitability of these PSUs. As valuations remain attractive compared to other infrastructure stocks, many analysts believe there is more upside left in railway-linked counters. Brokerage firms have begun upgrading their outlook for these stocks, with price targets revised upward for RVNL, Ircon, and RailTel based on future earnings potential and policy tailwinds.

However, analysts also advise caution as railway PSUs can be sensitive to policy shifts, execution risks, and fluctuations in raw material costs. Some volatility could emerge in the short term, especially after such a sharp rally. But long-term investors are being advised to keep an eye on order inflows, margin sustainability, and government spending patterns.

For now, with India’s infrastructure story gaining momentum and railway reforms continuing at pace, Ircon, RailTel, and RVNL appear firmly on the fast track to growth—delivering both investor returns and nation-building infrastructure.