Railway and allied stocks in spotlight ahead of Budget 2026; RITES, Titagarh Rail, CG Power on radar

Among public sector undertakings, RITES is seen as a preferred pick due to its consultancy-driven business model and close alignment with government-led railway and infrastructure projects.

• Railway stocks may rise in Budget 2026 with expected infrastructure spending.
• RITES and Titagarh Rail Systems seen as key beneficiaries of railway capex
• Ancillary firms in signalling and safety tech may attract investor interest

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Railway-linked stocks are expected to be in focus during the Union Budget 2026, amid expectations of continued government spending on infrastructure and policy continuity in the railways sector. While markets are not pricing in major surprises for railways, analysts believe sustained capital expenditure will remain a key driver for select stocks, particularly those aligned with execution, safety and capacity expansion.

The optimism around railway equities is anchored in the broader infrastructure narrative outlined in the Economic Survey, which highlights record capital outlays, rapid network expansion and near-universal electrification. Railway capital expenditure is expected to increase by around 15 per cent in FY26, reinforcing the government’s corridor-based approach to capacity creation, modernisation of assets and multimodal connectivity.

Market participants note that the Budget’s impact on railway stocks is likely to be stock-specific rather than sector-wide. Companies with strong order books, execution capabilities and visibility on future projects are expected to outperform, while broader re-rating across the sector appears unlikely given that much of the optimism is already reflected in current valuations.

Among public sector undertakings, RITES is seen as a preferred pick due to its consultancy-driven business model and close alignment with government-led railway and infrastructure projects. In the non-PSU space, Titagarh Rail Systems is drawing attention as a key beneficiary of rolling stock demand, supported by ongoing capacity expansion and export opportunities.

Railway-linked ancillary stocks, particularly those exposed to signalling, safety systems and train protection technologies, are also expected to attract investor interest. Companies such as CG Power, HBL Power and Kernex Microsystems could benefit from increased allocations towards advanced signalling, electronic interlocking and the accelerated deployment of the Kavach automatic train protection system.

Brokerage firms, including Axis Securities, have highlighted that station redevelopment and safety upgrades are likely to remain central to budgetary priorities. Accelerated implementation of economic railway corridors under PM GatiShakti, coupled with wider adoption of Kavach 4.0 and advanced signalling systems, is expected to dominate execution strategies in the coming years.

Overall, analysts suggest that the Union Budget 2026 will be closely watched for signals on policy stability and the government’s long-term commitment to railway modernisation. While the sector’s growth story remains intact, investors are expected to remain selective, favouring companies with strong fundamentals, execution visibility and direct exposure to priority areas within the railway infrastructure ecosystem.

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