NEW DELHI: Despite weakness in the broader equity market, railway stocks surged up to 19% on Friday following the central government’s announcement that they are planning to introduce 3,000 new trains in the next four to five years.
Shares of Titagarh Rail Systems (TRSL) soared up to 19% on Friday to hit a fresh one-year high of `995 apiece. Titagarh shares, which have rallied more than 330% in calendar year 2023 so far, closed the session 16% higher at Rs 969 apiece on the BSE.
Shares of Railtel Corporation of India surged 9% to close at Rs 270 apiece while Ircon International gained over 8% to close at Rs 167 a piece. The sector heavyweights- Indian Railway Finance Corporation (IRFC) and Indian Railway Catering and Tourism Corporation (IRCTC)- advanced about 5% each. Other railway scrip such as Rail Vikas Nigam (RVNL), RITES and Jupiter Wagon surged about 5-6% each on Friday.
Union Minister Ashwini Vaishnaw on Thursday said he is working on a plan to introduce 3,000 new trains in the next four to five years to raise the railways’ passenger capacity from 800 crore at present to 1,000 crore. As per the minister, railways is likely to add 200 to 250 new trains every year, besides the 400 to 450 Vande Bharat trains, which are going to be added in the coming years.
Not only capacity addition, strong order books of firms engaged in the sector are also catching the fancy of the investors. For example, Titagarh alone has an order book Rs around Rs 28,000 crore. Vinod Nair, head of research at Geojit Financial Services, said till September Ministry of Railways has spent 60% of the FY23-24 annual allocation capex of total Rs 2.4 lakh crore. He added that the market has rewarded the railway stocks, as explained by our peer universe (BEML, Titagarh, Texmaco, RNVL, RITES, CG Power, Railtel), which has outperformed, delivering an average return of 147% in the last 1 years.
