Railway Stocks Rally Ahead of Budget, Expectations High for Increased Allocation

Shares of railway-related companies are experiencing significant gains as they continue their upward trend, with some jumping up to 15 percent and reaching new highs. This surge is driven by heavy volumes and the anticipation of higher allocation for Indian Railways in the upcoming Budget 2024. Railway stocks have already soared up to 75 percent just in the month of January.

Among the top gainers, Indian Railway Finance Corp Ltd (IRFC) surged 15 percent to reach a new high of ₹261.35, while RVNL (Rail Vikas Nigam Limited) rallied 10 percent to its record high of ₹320.75. IRFC also climbed 9.7 percent to its new peak of ₹176. RailTel and IRCTC also recorded gains, with RailTel jumping 8 percent to reach an all-time high of ₹417.80 and IRCTC advancing 4.7 percent to its 52-week high of ₹1,029.85.

While the trend for railway stocks remains strong, some analysts suggest that it may be overstretched at the moment. Aditya Gaggar, Director of Progressive Shares, advises investors to book partial profits.

RVNL has been on a positive streak for the past 10 sessions and has witnessed a 75 percent surge in January alone. In the last year, the stock has provided significant returns, with a jump of 279 percent. Similarly, IRFC has also experienced a remarkable rally of over 74 percent this month, leading to a total increase of 385 percent in the past year. IRCON has gained 276 percent in the last year and 45 percent in January, while RailTel has advanced over 21 percent this month and 201 percent in the last year. IRCTC has added 14 percent in January and 54 percent in the past year.

Several market experts have high expectations for the upcoming budget, predicting increased allocation for Indian Railways. Elara Capital notes that capital spending has been prioritized for railways, roads, and defense, and they anticipate this focus to continue at a moderate pace. Prabhudas Lilladher emphasizes the potential for a jump in railway capex, especially with a greater emphasis on modernization and the addition of more Vande Bharat trains. Additionally, ICRA expects adequate allocations for infra sectors such as roads, highways, and railways.

Overall, the railway sector is eagerly anticipating the upcoming Budget 2024 and hopes to see increased allocations and further modernization initiatives that will contribute to revenue generation and the improvement of the National Rail Network.