RVNL, Ircon, IRFC, other rail stocks surge up to 15% as Union Budget nears

Vivek Lohia, MD of Jupiter Wagons, highlights the importance of timely creation of economic corridors for enhanced connectivity and economic growth through Indian Railways.

Railway stocks including RVNL, Ircon International, IRFC surged up to 15 percent on July 8 on the back on strong buying interest, after Railway Minister Ashwini Vaishnav said last week that plans are in the works for 2,500 new general passenger coaches and 10,000 additional coaches.

Vaishnav's announcement of the production of 50 new Amrit Bharat Trains - a high-speed and luxury train service - added to the rally in railway stocks.

Expectations of special focus on the railway infrastructure in the Union Budget have helped push the stocks higher. The government is focusing on improving the railway infrastructure and ensuring faster development and completion of tracks, rail electrification, rolling stock manufacturing and delivery of passenger freight services.

Narendra Modi government's focus on infrastructure building, especially through domestic manufacturing in sectors such as railways, defence, and power has boosted stocks from these spaces in last few years.

Now, with BJP-led NDA retaining power for a third term, investors are hopeful of policy continuity. In an earlier note, Goldman Sachs had said that it expects continued thrust on infrastructure creation through the development of railways.

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The budgetary allocation towards railway projects was increased to Rs 2.55 lakh crore for 2024-25 in the interim budget, from Rs 2.40 lakh crore in 2023-24. Analysts project Indian railway companies to likely expand their capex and sustain volume growth.

Shares of Ircon International surged over 4 percent to hit a fresh record high of Rs 334.50 on the National Stock Exchange (NSE). Rail Vikas Nigam Limited (RVNL) zoomed over 15 percent to hit an all-time high of Rs 567.50.

Shares of Indian Railway Finance Corporation (IRFC) witnessed a massive upside movement of 9.5 percent to hit a fresh peak of Rs 206 on NSE. Indian Railway Catering and Tourism Corporation (IRCTC) share price also increased by nearly 2 percent to hit the day's high of Rs 1,049.30.

RaiTel gained over 7 percent to hit a new high of Rs 559.40. Texmaxo Rail stock also surged 7 percent to a record high of Rs 295.50 on NSE. Shares of RITES were alsotrading with gains of around 1 percent.

On the flip side, Jupiter Wagons and Titagarh Rail stocks were trading with losses of up to 2 percent.

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