Indian Railways is expected to increase its capital expenditure (capex) by approximately 15 percent in FY27, surpassing Rs.3 lakh crore, according to a senior official from the Ministry of Railways. This marks a significant rise from FY26, where the capex allocation is expected to remain unchanged at Rs.2.62 lakh crore. Key areas of focus for investment include network infrastructure, rolling stock, safety, and station redevelopment. The railways are also progressing on new projects such as bullet trains, hydrogen-powered trains, and the Hyperloop, with work on these initiatives expected to accelerate starting FY26.
The production of locomotives, wagons, and coaches is set to increase significantly in the coming years. For example, coach production has grown from 3,731 in FY13 to 6,550 in FY24, with plans to reach 8,000 annually. Similarly, wagon production has tripled over the past decade, with an annual target of over 30,000 wagons.
Here are a few railway stocks to benefit from this development:
1. Indian Railway Finance Corporation (IRFC)
With a market capitalization of Rs.1.62 lakh crore, IRFC’s share price closed at Rs.124.01 per share on Friday, falling 0.3 percent from its previous close. Indian Railway Finance Corporation (IRFC) serves as the financial arm of Indian Railways, responsible for funding rolling stock acquisitions and infrastructure development. It plays a crucial role in financing large-scale railway projects, including emerging initiatives like bullet trains. IRFC shares saw a dramatic rise following its IPO in January 2021, delivering nearly 900 percent returns by July 2024, before experiencing a correction.
IRFC’s partnership with India Infrastructure Finance Company Ltd (IIFCL) is designed to enhance financing opportunities for railway infrastructure projects. The company’s consistent involvement in railway expansion has created a strong base for long-term growth, which has made it attractive to investors. With a robust portfolio of projects and continued support for Indian Railways, IRFC is well-positioned for sustained performance in the railway sector.
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2. Rail Vikas Nigam Limited (RVNL)
With a market capitalization of Rs.73,371 crore, RVNL’s share price closed at Rs.350.80 per share on Friday, falling 1 percent from its previous close. The company’s current order book stands at Rs 97,000 crore, which includes Rs.49,000 crore from bidding works and Rs.47,600 crore from railway projects. This is a decline from the historically higher level of Rs.1,40,000 crore. The management is now focusing on market-driven bidding, with an expected annual turnover of Rs.28,000 crore to Rs.30,000 crore and an estimated project execution timeline of 3-4 years.
Management remains optimistic about achieving its revenue targets, citing favorable conditions in Q4. They are confident that they can maintain strong margins despite competitive pressures by leveraging operational efficiency and effective project execution.
3. Texmaco Rail & Engineering Ltd
With a market capitalization of Rs.5,393 crore, Texmaco Rail & Engineering Ltd’s share price closed at Rs.135.00 per share on Friday, falling 2.7 percent from its previous close. Texmaco Rail & Engineering Ltd specializes in the manufacturing of wagons, coaches, and freight cars. The company recently strengthened its position in the freight car segment through the acquisition of Jindal Rail and Infra, which has been rebranded as Texmaco West Rail. This acquisition has enhanced Texmaco’s production capabilities and market reach.
Texmaco has seen a significant increase in wagon production over the past decade, with annual production targets now exceeding 30,000 units. As Indian Railways’ capital expenditure plans continue to drive demand, Texmaco is poised to benefit from the growing need for railway equipment.
Written by – Siddesh S Raskar
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