Railway stocks: Railway stocks chug ahead on capex push, order wins – News Air Insight

Mumbai: Railway stocks surged on Monday as a slew of order wins and capex push by the government revived investor appetite.

Ircon International jumped 6.8%, while RailTel Corporation of India gained 6.5%. Rail Vikas Nigam and Jupiter Wagons advanced 2.8% and 2.5%, respectively, and Titagarh Rail Systems, and Indian Railway Finance Corporation rose close to 2%.

Analysts said some stocks could gain up to 25% in the near term, though they cautioned investors to remain selective given valuations.

“Railway stocks have been underperforming for over a year, and the recent ₹77,000-crore capex announcement coupled with the inauguration of the Bairabi-Sairang railway line in Mizoram and projects worth ₹8,500 crore in Manipur, boosted sentiment,” said Vipin Kumar, AVP Equity Research & PMS (Derivatives & Technical Analyst), Globe Capital Market.

Over the past year, most railway stocks slumped between 15% and 37%. However, fresh order wins and policy-led capex cues have lifted them by as much as 12% in the past five sessions. RailTel received a Letter of Award worth about ₹210 crore for the Bihar Education Project on September 13.

Rail Vikas Nigam emerged as the lowest bidder for a Rs 169-crore traction sub-station project from West Central Railway, while Jupiter Wagons’ subsidiary secured a Rs 113- crore order for 9,000 LHB axles from the Railways Ministry. “The outlook is constructive, with visible order flows, ongoing tendering activity and continued policy push expected to sustain investor interest,” said Om Ghawalkar, market analyst, Share.Market. Valuations, though, remain mixed across public-sector undertakings (PSUs) and private players. While the near-term setup looks constructive, some names may face bouts of consolidation given stretched pricing in parts of the market, he said.

Rail Vikas Nigam and Titagarh Rail Systems are trading at Price to Earnings (PE) ratio of around 50 times earnings, while IRCON, RITES and IRFC are in the 20–30 times band. RailTel trades in the mid-to high 30s.

Texmaco and Jupiter Wagons command relatively richer valuations, supported by localisation potential in wheels, axles and wagons. Kumar said an upside of 20–25% is possible over the next six to 12 months, but investors should stay selective. “The valuations have turned reasonable in railway stocks,” said Kumar. “Titagarh Rail Systems, RailTel Corporation, Ircon International and Rail Vikas Nigam are some of the stock picks.”