Rail Industry Growth

Rail Stocks Rally: RVNL, IRFC, TexRail Surge Up to 15% on July 08 – Here’s Why

Shares of railway-related companies soared by up to 15% on the BSE during Monday’s intra-day trade, continuing their upward momentum from the previous two trading days, where they had surged up to 36%. This rally occurred amid heavy trading volumes, contrasting with an otherwise subdued market. In comparison, the BSE Sensex was down 0.11% at 79,912.

Key Factors Driving the Rally:

• Government Focus on Railway Infrastructure: The Government of India (GoI) is placing significant emphasis on improving railway infrastructure. This includes faster development and completion of tracks, rail electrification, rolling stock manufacturing, and enhanced passenger and freight services. The budgetary allocation for railway projects has been increased to ₹2.55 trillion for 2024-25, up from ₹2.40 trillion in the previous year.
• Upcoming Budget Expectations: The rally was further fueled by news reports suggesting that the government might announce higher allocations for the railway sector in the upcoming budget on July 23. Recently, the Minister for Railways, Ashwini Vaishnaw, unveiled plans for 2,500 new general passenger coaches and 10,000 additional coaches.

Stock Performance Highlights:

• Rail Vikas Nigam Ltd (RVNL): RVNL shares hit a new high of ₹567.60, surging 15% in intra-day trade on July 8. The stock has zoomed 36% over the past two trading days. At 10:31 AM, RVNL was trading 13% higher at ₹557.05, with a two-fold increase in average trading volumes. A combined 81.94 million shares changed hands on the NSE and BSE.
• Indian Railway Finance Corporation (IRFC): IRFC shares reached a record high of ₹206, rallying 6% on the back of a four-fold rise in average trading volumes. A combined 158.69 million shares were traded on the NSE and BSE. The stock has rebounded 36% from its level of ₹151.20 on June 4. On May 29, S&P Global Ratings revised its outlook on IRFC to positive from stable, reflecting the company’s critical role and integral link with the Indian government.
• Texmaco Rail & Engineering (TexRail): TexRail shares hit a new high of ₹295.65, rallying 8% in intra-day trade on the BSE. Over the past two trading days, the stock has surged 16%. TexRail has an installed capacity of 10,000 Vehicular Units (VUs) of wagons and holds a healthy order book of ₹7,878 crore as of April 01, 2024.

Company-Specific Insights:

• RVNL: Engaged in implementing various rail infrastructure projects, RVNL has opportunities to secure rail infrastructure projects overseas. Its business includes doubling lines, gauge conversion, new lines, railway electrification, and more.
• IRFC: As the primary market borrowing arm for Indian Railways, IRFC supports the Indian Railways Infrastructure Development Plan. It plays a strategic role in financing rolling stock and railway infrastructure projects, with ongoing governmental support in various forms.
• TexRail: With a significant order book and large manufacturing capacity, TexRail is well-positioned to benefit from the growing demand for wagons. It has also been receiving large orders from private sector companies for commodity-specific wagons.

Conclusion:

The rally in rail stocks reflects strong investor confidence in the sector’s future growth, driven by substantial government investments and strategic initiatives aimed at enhancing railway infrastructure. As the GoI continues to prioritize this sector, stocks like RVNL, IRFC, and TexRail are likely to see sustained interest and growth.

Rail Industry Growth

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