Railway Stocks on the Rise: Why IRFC, RVNL share price rallied?

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Railway stocks are rising

On Monday 4th September, the value of railway company shares jumped, continuing their stellar rally, primarily taking support from massive Government investments into the sector. The Ministry of Railways will ask the Cabinet for approval to invest ₹5.25 lakh crore in the PM Gati Shakti National Master Plan from 2024 to 2031.

The plan aims to build new railway tracks, electrify existing lines, upgrade signaling and safety systems, and develop dedicated freight corridors. A major chunk of the investment will be directed towards the development of high-speed rail corridors. Construction, engineering, technology, and logistic companies will also benefit from being involved in the building, designing, and developing of the master plan. 

Railway Stocks on the Rise: RVNL, IRCTC, and IRFC are leading the Sector

  • Indian Railway Finance Corp (IRFC) started higher than it closed yesterday and reached a new highest price of ₹66.90 on the National Stock Exchange (NSE). 
  • Rail Vikas Nigam Ltd (RVNL) started on a positive note, and it reached a new all-time high of ₹163.45 per share and marked an increase of about 18% during the day's trading.
  • Indian Railway Catering and Tourism Corporation (IRCTC) also began higher than before and reached a peak price of ₹703.20 per share, resulting in a 2% increase in morning trading.
  • Ircon International prices reached a new all-time high of ₹126.40 per share and the shares increased in value by about 6% during the Monday trading session.

Railway Stocks on the Rise: Share Price Performance

Railway Stocks1-day1-month1-year5-year
Ircon International7.33%25.15%199.06%206.77%
RITES Ltd (Rail India Technical and Economic Service Limited)0.37%11.67%71.24%145.21%
Texmaco Rail and Engineering Ltd6.41%46.34%209.01%120.20%

(Data as market closed on 4th September 2023)

Railway Stocks on the Rise: Reasons pushing the railway sector

  • Government investments: The Indian government has announced plans to invest heavily in the railways in the coming years. This includes plans to build new lines, upgrade existing infrastructure, and electrify the railway network. 
  • Production-linked incentive (PLI) scheme: The government has also announced a PLI scheme for train component makers. The goal is to reduce dependency on imports from China and Europe. This scheme is also expected to attract foreign investment in the railway sector.
  • Demand for rail travel: The demand for rail travel is growing due to a number of factors, including rising disposable incomes, increasing urbanization, and the government's focus on promoting public transportation. 

Railway Stocks on the Rise: Analyst’s Call

IRFC: Motilal Oswal has a Hold rating on the stock with a stop-loss at Rs 61. The firm also cited that prices can go up to Rs 72 within a short-term period. Analysts remain bullish about the growth of the stock. 

IRCTC: Choice Broking has a Buy rating with a price target of Rs 725 to Rs 750 in the short term. The firm also added that the stock has given a breakout at Rs 675 and is expected to be positive on the chart pattern. 

RVNL: Motilal Oswal has a Hold rating on the stock with a stop-loss at Rs 148 and setting the target price for Rs 160. Furthermore, JM Financials suggested a target price of Rs 175 and GCL Broking expects a strong breakout at above Rs 144 level.