India’s railway network has a long history. It dates back to the British colonial era, wherein the first passenger train ran from Mumbai to Thane in 1853. Since this period, the Indian Railways has grown exponentially. It is a state-owned enterprise comprising millions of miles of tracks, numerous stations, and a vast fleet of trains.
The Indian railway sector has long been a central pillar of the nation’s transport infrastructure, playing a vital role in the economy.
Railways in India operate passenger services, suburban trains, and luxury trains, too, connecting remote villages to major cities. Apart from passenger services, this sector plays a key role in transporting freight across the country.
The Indian railway system, with its extensive tracks, bustling stations, and iconic trains, is more than just a mode of transportation. It is a lifeline that connects people, goods, and cultures across the vast expanse of India.
Check out the top stocks in this sector as investment options and an overall analysis of the railway sector as a whole.
Advantages of Investing in Railway Stocks
- Railway stocks are typically viewed as long-term investments, as the infrastructure required for the railway system takes time to build and maintain. It allows investors to invest in a sector that is likely to grow steadily over the long term.
- The new projects for FY 2024-25 includes three major economic railway corridor programs. These initiatives, designed to streamline energy, mineral, and cement logistics, improve port connectivity, and upgrade high traffic density corridors, are pivotal under the PM Gati Shakti plan for multi-modal connectivity.
- The Indian government’s commitment to improving the country’s transportation infrastructure is evident from the increased allocation of funds for the railways in the Interim Budget. This provides a stable foundation for railway stocks and gives investors confidence in the sector’s growth potential.
- With increased passenger expectations, the railways plans to refurbish 40,000 rail bogies similar to Vande Bharat standards, prioritising passenger safety and comfort. The upgraded interiors with a modern look will enhance passenger comfort and satisfaction, which could translate into higher demand for railway services.
Overview of Best Railway Stocks in India
- Railtel Corporation of India Ltd.
- Rail Vikas Nigam Limited (RVNL)
- Indian Railway Food and Tourism Corporation (IRCTC)
- Indian Railway Finance Corporation (IRFC)
- Container Corporation of India (CONCOR)
- Titagarh Wagons Limited (TIML)
- Jupiter Wagons Ltd.
- Ramkrishna Forgings Ltd.
- Kernex Microsystems (India) Ltd.
- Bharat Earth Movers Limited
Given below is the overview of the best railway sector stocks as per analyst ratings and market capitalisation :-
1). Railtel Corporation of India Ltd.
Railtel, listed on the stock exchange, frequently hits upper circuit limits as it plays a crucial role in India’s digital transformation within the railway sector. Thus, the company’s involvement in providing high-speed internet and telecom services to the railway industry makes it a sought-after stock with growth potential, leading to upper-circuit trends. According to our list, Raitel is the best railway stock to buy now according to its fundamental score. As of 29th May 2024, this railway company in India has a market capitalisation of Rs. 13,750 cr. The company’s revenue growth at a yearly rate has also increased by 14.19%, over the past 5 years.
2). Rail Vikas Nigam Limited (RVNL)
Rail Vikas Nigam Limited, or RVNL, is completely involved in the development of rail infrastructure. Its main business includes infrastructure related to new lines, bridges, workshops, production units, electrification, etc. From government ministries to PSUs, RVNL has a vast network of clients. It is an important entity responsible for executing all kinds of railway projects, railway electrification, metro projects, construction of cable-stayed bridges and a lot more.
3). Indian Railway Food and Tourism Corporation (IRCTC)
IRCTC is a Mini Ratna for the Government of India. It is a major and extended arm of railways. It was incorporated on 27th September 1999 to upgrade, professionalize and manage railway services provided to travellers. As on 30th April 2024, the market capitalisation of IRCTC is Rs. 83,100 crores and is one of the renowned companies in the railway sector. Here are the four core initiatives taken up by IRCTC.
- Catering and Hospitality
- Internet Ticketing
- Travel and Tourism
- Packaged Drinking Water (Rail Neer)
The company is almost debt-free and has offered a good return on capital employed of 59% for the fiscal year 2023. Moreover, the stock is also maintaining a healthy dividend pay-out of 44%.
4). Indian Railway Finance Corporation (IRFC)
Indian Railway Finance Corp Ltd (IRFC) plays a pivotal role as the financing arm of the Indian Railways. It raises financial resources from domestic and international markets at competitive rates and terms for funding growth and operations of the Indian Railways. IRFC’s financial strategies and operations are crucial for maintaining the liquidity and financial health of the railways.
IRFC boasted a market capitalisation of Rs. 205,502.26 crore and a stock price of Rs. 157.25, as of 30th April 2024. It recorded a net income of Rs. 368.70 crore and an exceptionally high return on equity of 6,337.01%, with a fundamental score of 14.66.
5). Container Corporation of India (CONCOR)
CONCOR is a Navratna public sector undertaking under the Indian Ministry of Railways. CONCOR is one of the best railway shares that provides end-to-end logistics solutions, including storage, handling, and transportation of containerized cargo. This midcap Indian railways subsidiaries occupy 9.91% of the market share. This Indian railway-related share has a market capitalisation of Rs. 67,196 cr. and is 2.85x as volatile as Nifty. The debt-to-equity ratio has been 5.72%, while the current ratio has been 257.26%, over the last 5 years.
6). Titagarh Wagons Limited (TIML)
Titagarh Rail Systems Limited was formerly called Titagarh Wagons Limited. It was established in 1997 with the sole objective of supplying passenger rolling stock, including metro coaches.
It operates through 4 business divisions, namely, Railway Freight, Railway Transit, Engineering, and Shipbuilding. Apart from this, it also designs and manufactures wagons such as container flats, cement wagons, clinker wagons, tank wagons, etc.
The company manufactures freight wagons, passenger coaches, metro train coaches, train electricals and a lot more and generates 35% revenue from this segment. The company has the capacity to manufacture 8,400 wagons, 200 metro coaches and 36 electric multiple unit coaches, and process around 30,000 tonnes of casting steel, per annum.
7). Jupiter Wagons Ltd.
Jupiter Wagons Ltd is engaged in the manufacture of railway wagons, tankers, and coaches. It also ventures into manufacturing components for the defence sector. Jupiter Wagons is noteworthy for its collaborations and joint ventures with global leaders in wagon manufacturing, enhancing its technological capabilities and product offerings.
The company had a market capitalization of Rs. 16,840.13 crore and a stock price of Rs. 408.45, as of 30th April 2024. Its net income reached Rs. 274.55 crore, a return on equity of 120.78%, and a fundamental score of 16.25.
8). Ramkrishna Forgings Ltd.
Ramkrishna Forgings Ltd specialises in manufacturing forged and machined components for the rail, automotive, and oil & gas sectors. Beyond its presence in the rail sector, the company stands out for its diversification into manufacturing parts for heavy trucks, an area that complements its rail component manufacturing business.
As of 30th April 2023, the company noted a market capitalisation of Rs. 13,563.02 crore, with a stock price of Rs. 750.90. The net income was Rs. 127.96 crore with a return on equity of 248.12%, and a fundamental score of 20.68.
9). Kernex Microsystems (India) Ltd.
Kernex Microsystems (India) Ltd , is an ISO 9001 certified company established in 1991 and registered as 100% Export Oriented Unit. The Company has a proven track record in providing professional Electronic systems that can operate under stringent / harsh environmental conditions. Our capabilities include Concept, Design, Validation, Manufacture, Evaluation, Installation and provide technical and maintenance support, on turn key basis.
Kernex has been committed to providing a broad range of high value-added embedded R&D services and Electronics Manufacturing Services (EMS/CEM), enabling customers to maximize and optimize their resources and apply their core strengths in research and development (R&D), design, and marketing. These services benefit end-users and customers, in accelerating time-to-market of broad range of applications.
10). Bharat Earth Movers Limited
Bharat Earth Movers Limited is a public railway sector stock company. Thus, it is primarily engaged in the manufacturing of mining and construction equipment, defence products, and railway rolling stock. BEML manufactures a wide range of rolling stock, including coaches, wagons, and locomotives for the Indian railways stocks. Additionally, it is involved in the defence sector, producing a diverse range of defence and aerospace products. As of 29th May 2024, the company’s market capitalisation is Rs. 19,018 cr. The debt to equity ratio is 23.72% while the current ratio is 234.04%, over the last 5 years.
How to Invest in the Best Railway Stocks in India?
- There are several avenues to invest in the best rail stocks in India, catering to different risk appetites and investment styles. One can invest individually or by buying mutual funds or exchange-traded funds (ETFs) that invest in rail stocks. You can also invest a fixed amount regularly in railway-focused mutual funds or ETFs through systematic investment plans (SIPs) to benefit from rupee-cost averaging and long-term wealth creation.
- This includes analysing financial reports, tracking records, growth prospects, and competitive positioning of railway companies to make informed investment decisions. Staying up-to-date with the latest news, trends, and regulatory changes is also vital for investors.
- Staying informed about market trends and sentiment is critical for investors in the Indian railway sector. This includes tracking market indices, sector performance, and regulatory changes that may impact railway stocks. By staying attuned to market trends, investors can adjust their investment strategies to capitalise on opportunities and mitigate risks.
- Tickertape Stock Screener features over 200+ filters, allowing investors to narrow down their search effectively across various parameters like financial ratios, company fundamentals, and stock performance metrics. Additionally, it offers the capability to create custom filters, giving users the flexibility to tailor their screening criteria to fit specific investment strategies or needs. Filter your favourite railway stocks now!
Factors to Consider Before Investing in Top Indian Rail Stocks
Since the Indian railways is a state-owned enterprise, it is significantly influenced by the policies and regulations stipulated by the government. Therefore, make sure you stay updated with the infrastructure developments, tariffs, privatisation, budget allocation, etc.
It is important to assess the financial performance of the Indian rail stock companies before investing. Look at factors such as revenue growth, profitability, and debt levels.
To understand the growth potential of the railway industry, make sure to monitor the technological advancements in the sector. Since growth potential indicates healthy balance sheets, therefore, keep an eye on innovation, automation, digitalization, and electrification in the industry.
The Indian economy is growing at a rapid pace, which is another positive sign for the railway sector stocks. As the economy grows, more people will be able to afford to travel by train, which will lead to increased demand for the best railway stocks India.
The Indian railway sector is largely dependent on passenger and freight transportation. Therefore, you should check factors such as population growth, industrial activities, trade volumes, etc, to assess the demand for services offered by railways.