Imagine a network that pulses with life, connecting the vast expanse of a diverse nation, fueling its economy, and touching millions of lives every day. Welcome to the Indian railway sector – which serves as an enormous network of rail tracks, intricately connecting cities, towns, and villages.
This extensive system forms the fundamental structure supporting India’s socio-economic development.
With its massive railway network, the Indian railway sector holds significant importance in the country’s economic story. It plays a crucial role in India’s GDP, employing a large number of people and driving both rural and urban development.
This article delves into the intricate world of railway stocks in India, providing a comprehensive analysis of their performance and the railway stocks news.
Railway industry
The Indian railway industry is a massive and complex network that serves as the foundation of the country’s transportation infrastructure.
In 2023, the Indian railways experienced an impressive expansion, with the addition of 5,243 km of track length, marking a substantial increase compared to the previous year. With this expansion, there was an impressive average daily track laying of 14.4 km per day, which set a new record for the highest-ever commissioning in a single year.
Every day, the railways oversee a considerable number of train services, which includes managing 13,523 trains for passengers and 9,146 trains for freight.
The industry has embraced 100% FDI under the automatic route for railway infrastructure, indicating a favourable climate for foreign investments. This move is anticipated to enhance and broaden the railway infrastructure in India.
The ‘Gati Shakti Multi-modal Cargo Terminal (GCT)’ is a new policy that aims to encourage businesses to invest in the development of new rail cargo terminals. The policy includes the coverage of all new and under-construction cargo terminals and sets a target of establishing 100 GCTs within the next three financial years.
The Indian railways have also formulated the National Rail Plan (NRP) targeting India’s railway development by 2030. The plan aims to establish a modernised railway system by 2030, to significantly boost the proportion of freight transported by railways to 45%. The NRP is crafted to proactively meet and serve future demand, guaranteeing the railways’ ongoing expansion and long-term viability.
Railway sector stocks
Investing in railway stocks presents a promising opportunity for investors seeking sustained growth over the long term. These stocks are closely linked to the country’s economic activities, and their performance often reflects the overall health of the economy.
Let’s look at some of the Indian railways stock.
Rail Vikas Nigam Ltd (RVNL)
RVNL, an enterprise in the public sector of India, functions as the construction division of the Ministry of Railways, responsible for executing projects and developing infrastructure for transportation.
It was established in 2003 to address the growing infrastructure needs of the country and to efficiently execute projects while also establishing a railway equipment construction company.
As of April 26, 2024, the RVNL share price is ₹289.60. The return given by the stock over the past 5 years is 1,150.97%.
Indian Railway Finance Corporation (IRFC)
The Indian Railway Finance Corporation (IRFC) is a state-owned entity in India that primarily seeks to borrow money from financial markets and other sources to finance the construction and maintenance of the country’s railway network.
The Indian government owns a large portion of the corporation and the Ministry of Railways is in charge of its administrative affairs.
As of April 26, 2024, the IRFC share price is ₹157.80. The return rate given by the stock over the past 5 years is 536.29%.
Indian Railway Construction International Limited (IRCON)
IRCON International, also known as Indian Railway Construction International Limited, is a corporation based in India that focuses on engineering and construction, particularly in the field of transportation infrastructure.
This enterprise in the public sector was established in 1976 by the Indian Railways, in accordance with the Indian Companies Act of 1956. IRCON functions entirely under the ownership of the Indian railways, registered as Indian Railway Construction International Limited.
As of April 26, 2024, the IRCON share price is ₹250.20. Over the previous five years, the stock has given a return of 510.10%.
Rail India Technical and Economic Service Limited (RITES)
RITES Ltd, also known as Rail India Technical and Economic Service Limited, functions as a Navratna central public sector enterprise under the jurisdiction of India’s Ministry of Railways.
Established on April 26, 1974, this organisation is a versatile engineering and consultancy firm that offers a wide range of services in the field of transport infrastructure and related technologies, covering everything from initial concepts to final implementation.
As of April 26, 2024, the RITES share price is ₹694.05. The return given by the stock over the past 5 years is 248.98%.
RailTel Corporation of India Ltd (RailTel)
RailTel Corporation of India Ltd. is a public sector enterprise in India that provides services in broadband and VPN.
Established in September 2000, RailTel’s primary objectives include improving the safety system and train control operation of the Indian Railways and creating a comprehensive broadband, telecom, and multimedia network.
As of April 26, 2024, the RailTel share price is ₹402.95. The return given by the stock over the past 5 years is 232.06%.
Financial comparison
Let’s compare the financial performance of each of the railway stocks by comparing their Dec 2023 quarterly results.
| RVNL | IRFC | IRCON | RITES | RailTel | |
| Revenue (₹ crores) | 4,689 | 6,742 | 2,884 | 683 | 668 |
| Net profit (₹ crores) | 359 | 1,604 | 245 | 129 | 62 |
| Market capitalisation (₹ crores) | 60,445 | 2,06,548 | 23,588 | 16,695 | 12,953 |
| ROE | 20.8% | 14.7% | 15.4% | 21.3 % | 12.0 % |
| Debt to equity | 0.76 | 8.54 | 0.30 | 0.00 | 0.03 |
| 5-year return | 1,150.97% | 536.29% | 510.10% | 248.98% | 232.06% |
Bottomline
The Indian railway sector serves as a fundamental pillar in the nation’s growth, merging economic advancement with enhanced connectivity and reachability.
Investing in railway stocks offers an attractive opportunity for investors looking for consistent returns and promising long-term growth potential.
Companies such as Rail Vikas Nigam Ltd, Indian Railway Finance Corporation, IRCON International, RITES Ltd, and RailTel Corporation of India Ltd demonstrate the potential for substantial returns, highlighting the strength of the railway sector and its crucial role in India’s economy.
The Indian railway sector represents progress and development, offering a promising opportunity for investors to be part of India’s journey towards a brighter and more connected future.
