Last Updated on Mar 17, 2023 by Harshit Singh
For many decades, the Indian railway industry has been the backbone of the country’s transportation system. So much so is the impact of the railways on the economy that in the recent Union Budget 2023-2024, an allocation of Rs. 2.40 lakh cr. is announced for revamping the infrastructure for railways. The news caused a sharp surge in the share prices of railway stocks and opened up new investment opportunities for those seeking to invest in a growing sector in India.
In this blog, we will explore how the recent developments in the railway sector during the ‘Amrit Kaal’ budget make railway stocks trending in 2023.
Table of Contents
About Indian railway sector
With over 1.4 mn employees, the Indian railway industry is the major contributor to the nation’s economy. It is the fourth largest railroad network in the world and spans thousands of kilometers, covering far-fledged regions nationwide.
Scope of the Indian railway industry in 2023
When the Union Budget announced a record allocation of funds for the railways, it caught the nation’s attention. With an outlay of Rs. 1 lakh cr. more than the previous fiscal year, the government has taken a significant step towards enhancing the country’s transportation infrastructure.
Additionally, the identification of 100 critical transport infrastructure projects for last and first-mile connectivity for key sectors like coal, fertilisers, and food grains, with a whopping investment of Rs. 75,000 cr., including Rs. 15,000 cr. from private sources, has opened up new avenues for investment and growth.
Railway Minister Ashwini Vaishnaw’s announcement that the railways are now manufacturing one train every seven days, with plans to increase it to two to three trains per week, indicates a promising future for the Indian railway system. This is great news for investors looking to invest in railway stocks.
List of railways stocks in India
Here is the list of railway stocks in India –
|Name||Sub-Sector||Market Cap(Rs. in cr.)||5Y Avg Return on Investment (%)||6M Return (%)||1M Average Volume (No. of shares)||PE Ratio|
|Indian Railway Catering and Tourism Corporation||Online Services||48,132||27.77||-16.39||9,82,160.75||72.52|
|Ramkrishna Forgings Ltd||Rail||4,236.46||8.49||35.65||6,59,212.25||21.39|
|Indian Railway Finance Corp Ltd||Specialized Finance||35,807.71||1.28||21.08||2,64,61,650.60||5.88|
|Jupiter Wagons Ltd||Rail||3,771.80||–||30.70||3,76,456.60||75.95|
|Titagarh Wagons Ltd||Rail||2,857.75||1.65||52.28||10,92,264.75||-8930.46|
|Rail Vikas Nigam Ltd||Specialized Finance||13,333.70||10.87||84.54||1,41,61,644.15||11.27|
|Texmaco Rail & Engineering Ltd||Rail||1,390.48||5.39||-15.93||11,14,698.4||67.79|
|Oriental Rail Infrastructure Ltd||Rail||250.81||9.11||-61.19||32,337.85||16.09|
Note: IRCTC, Rail Vikas Nigam Ltd and Indian Railway Finance Corp Ltd are complimentary stocks to railways stocks, thus qualified under railways stocks.
The list of railway stocks in India is derived using Tickertape Stock Screener. The data is as of 16th March 2023 and used the following parameters
- Sector – Rail
- 5Y Avg Return on Investment
- 6M Return
- 1M Average Trade Volume
- PE Ratio
5 Reasons to invest in railway stocks
Here are some reasons why investing in railway stocks may be a lucrative opportunity –
- Government support: The Indian government’s commitment to improving the country’s transportation infrastructure is evident from the increased allocation of funds for the railways in the Union Budget. This provides a stable foundation for railway stocks and gives investors confidence in the sector’s growth potential.
- Diverse projects: The new projects for FY 2023-24 include the introduction of indigenously built hydrogen trains, double-lining over 2,800 km, gauge conversion over 150 km, and construction of new lines over 600 km. The railways will also upgrade 1,275 stations, including major ones like New Delhi, Mumbai, and Kanpur. The diverse range of projects presents a broad investment opportunity for investors.
- Passenger expectations: With increased passenger expectations, the railways plan to refurbish more than 1,000 coaches of premier trains like Rajdhani, Shatabdi, Duronto, Humsafar, and Tejas. The upgraded interiors with a modern look will enhance passenger comfort and satisfaction, which could translate into higher demand for railway services.
- Track renewal: With high-speed Vande Bharat trains set to hit the tracks, the allocation for track renewal has been increased from Rs 15,388.05 crore in RE 2022-23 to Rs 17,296.84 crore this year. It indicates the railways’ commitment to safety and maintenance, which is critical for the long-term sustainability of the railway sector.
- Long-term investment option: Railway stocks are typically viewed as long-term investments, as the infrastructure required for the railway system takes time to build and maintain. It allows investors to invest in a sector that is likely to grow steadily over the long term.
Introducing new projects, refurbishing premier coaches, and increasing the allocation of funds for track renewal in the Union Budget presents a compelling opportunity for investors looking to diversify their portfolios and benefit from the growth potential of the railway sector. Additionally, the government’s commitment to improving the country’s transportation infrastructure provides a stable foundation for railway stocks, making them a promising investment opportunity.
Which is the best railway stock in 2023?
Based on 1-yr returns, Rail Vikas Nigam and Titagarh Wagons generated 113.03% and 165.35%, respectively.
Why are railway stocks going up?
As per Union Budget 2023-2024, the investors expect the announcements of new rail projects and the divestment of government stakes in some listed railway companies, leading to a rise in the value of railway stocks.
What is the 52-week low share price of IRCTC?
Rs. 557 is the 52-week low share price of IRCTC.
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