RVNL, IRFC, IRCTC, RITES, Railtel: Railway stocks rise up to 3% ahead of Budget

Shares of railway-related stocks such as Indian Railway Catering & Tourism Corporation Ltd (IRCTC), Rail Vikas Nigam Ltd (RVNL), Ircon International Ltd, Indian Railway Finance Corporation Ltd (IRFC), Titagarh Rail Systems Ltd, RITES Ltd, Railtel Corporation of India Ltd, and Jupiter Wagons remained in focus ahead of the Budget 2024. Finance Minister Nirmala Sitharaman is set to present the Union Budget in Parliament at 11 AM today, which is going to be the first full Budget of the Narendra Modi-led NDA government in its third term.

Ahead of Budget announcements, railway stocks were mostly trading higher, barring Texmaco Rail, led by Railtel, which rose nearly 3%. This was followed by Ircon International, which gained 1.5%, while index heavyweight IRCTC was trading flat. On the other hand, Texmaco Rail was down over 1%.

Among others, multibagger stock RVNL was up 0.5%, while IRFC, Titagarh Rail Systems, and RITES were trading higher with marginal gains.

In the Interim Budget in February this year, FM Sitharaman had allocated ₹2.52 lakh crore to the railways as gross budgetary support, plus an additional ₹10,000 crore from extra-budgetary resources. According to market experts, the government will continue to focus on railways infra development in the Union Budget.  

In the calendar year 2024, most of these railway stocks has witnessed strong rally, led by state-owned firm such as RVNL which topped the chart with 240% return. This is followed by IRFC at 104%, Jupiter Wagons (100%), IRCON at 83%, and Texmaco Rail jumped 59%. Among others, Titagarh Rail Systems shares gained 55%, while RailTel and RITES rose 49% and 45%, respectively. In comparison, the BSE Sensex has risen over 11% year-to-date YTD).

In the past one year, investors' appetite for railway stocks has increased amid a positive outlook for the sector, coupled with the government's impetus on infrastructure development in the railways. In the Union Budget 2024, the government of India increased capital expenditure by 11.11% to ₹11.11 lakh crore, providing tailwinds to the infrastructure sector and the companies engaged in this sector will benefit. The proposed capital outlay of ₹2.55 lakh crore and ₹2.78 lakh crore has been provided for railways and road & highways, respectively, which is the highest ever outlay. Besides, the government has announced implementation of 3 major railway corridor programmes under PM Gati Sakti to improve logistics efficiency and reduce costs. It is also promoting urban transformation via Metro rail and NaMo Bharat.

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