Top railway stocks in India traded in deep red on Monday, May 6, 2024, tracking sharp selling in broader PSU stocks. Heavyweights like IRFC, IRCTC, RVNL, ConCor, and BEML witnessed a frenzy of profit booking leading to a free fall of 2% to 5% in a single day. However, despite the latest free falls, the outlook for railway stocks remains intact due to the government's thrust for transforming the overall sector. Going forward, the execution of projects by railway companies is going to set the tone of investors in these stocks.
RAILWAY STOCKS, MAY 6, 2024
On May 6th, in a single trading session, IRFC which is the largest railway stock in terms of market share, dropped by 3.5%, followed by counterparts like RVNL and IRCTC plunged by 4.6% and 4.3% respectively.
The steepest decline was seen in RailTel to the tune of 5.12% after its Q4 results announcement. Texmaco Rail and Rites also shed between 4-5%. While other railway stocks such as BEML, and Container Corporation of India fell by 2% to 3.5%.
Talking about the latest drop in railway stocks, Shreyansh V. Shah, Research Analyst, StoxBox told GoodReturns.In that railway sector stocks are trading in the red today, mostly on the back of subdued sentiment in PSU stocks.
RAILWAY STOCKS, SECTOR OUTLOOK
He added, "Our sense is that the fundamental story of railway stocks remains intact due to the government's thrust on improving the overall railway infrastructure including electrification, laying new routes, upgrading existing train sets, high-speed rail infrastructure, etc."
Post the election, railway stocks are in for benefitting from a host of factors, however, the key is the execution of projects by these companies which has the potential of bringing back bulls.
With the government increasing capex in the last few years, we believe that railway sector stocks across the value chain would continue to be direct beneficiaries of higher spending. Going forward, the timely execution of order books for these railway companies would be of utmost importance to sustain the momentum in the future.
Earlier, as per reports, it was said that the Indian Railways is preparing a 100-day plan post-elections 2024. This will include various passenger-friendly measures, such as a 24-hour ticket refund scheme, a comprehensive super App for various railway facilities, three economic corridors, and sleeper Vande Bharat trains.
Meanwhile, the government is likely mulling to pump in Rs 10 lakh crore to Rs 12 lakh crore plan for driving this sector after the election.
Notably, FM Nirmala Sitharaman has made transformational announcements for the railways sector in the Interim Budget. She said, three major economic railway corridor programmes will be implemented. These are (1) energy, mineral, and cement corridors, (2) port connectivity corridors, and (3) high-traffic density corridors. Further, the rail budget's allocation for FY24-25 is 5% higher than a year ago budget.
Currently, India has the fourth largest railway system in the world, following the US, Russia, and China, Furthermore, the country is projected to account for 40% of the total global share of rail activity by 2050. The government's vision of 2024 has been envisaged for achieving the 2024 MT freight loading target by 2024.
As per the IBEF report, Indian Railways consistently elevates its practices by integrating cutting-edge technologies in line with global standards. Through electrification, modern services, and digital innovations, Indian Railways embraces a forward-looking approach.
It added that despite challenges, the sector effectively addresses issues with institutions such as NRTI and harnesses IoT and big data for operational excellence, ensuring a future marked by efficiency and sustainability. Envisioning an enriched passenger experience, Indian Railways plans the widespread adoption of high-speed, self-propelled trains and enhanced amenities. In a major stride, Indian Railways plans to introduce 60 new Vande Bharat Express trains in 2024. The overarching goal is continuously enhancing operational efficiency and customer satisfaction, demonstrating a positive trajectory in evolving practices and processes.
Earlier, in April, Rail Minister Ashwini Vaishnaw revealed that Indian Railways recorded the highest-ever revenue of Rs 2.56 lakh crore for the financial year 2023-24. In FY23, the revenue stood at Rs 2.40 lakh crore. Further, through his X handle, he said that Indian Railways recorded best-ever tracks laid of 5,300 KM, freight loading of 1,591 MTs, and 551 digital stations. He said, "Indian Railways On High Growth."
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