RailTel stock soars 18% on heavy volumes; up 331% in 1 year

Shares of RailTel Corporation of India (RailTel) hit a new high of Rs 611.10, surging 18 per cent on the BSE in Friday’s intra-day trade amid heavy volumes.

In the past one month, the stock of telecom service provider for Indian Railways has rallied 47 per cent after winning multiple orders worth Rs 161 crore. In the past one year, the stock price of RailTel has zoomed 342 per cent, as compared to 23 per cent rise in the BSE Sensex.

At 01:21 pm; RailTel was trading 16 per cent higher at Rs 603, as against 1 per cent gain on the BSE benchmark index. The average trading volumes at the counter nearly doubled. A combined 58.18 million shares changed hands on the NSE and BSE.

Railte is a Miniratna (category-I) PSU, which owns a pan-India fibre optic network, providing broadband and multimedia services, along with modernisation and maintenance of the communications network of the Indian Railways. The company now also offers services to other private and government clients as well. It has two main lines of business - telecom and projects. Under telecom services, it provides lease line services NLD, internet services (ISP) and passive infrastructure services (IP-1). Under the project segment, the company gains from its expertise to lay and maintain OFC networks for other entities.

The company owns  ~61,000 km of optical fibre network to provide long-distance  services, including  internet and  passive  infrastructure services, across  the  country. In addition, it executed critical  projects of  national  importance  such  as  BharatNet,  National Knowledge Network (NKN), railway signalling, among others.

The government of India is focused on improving the railway infrastructure and ensuring faster development and completion of tracks, rail electrification, rolling stock manufacturing and delivery of passenger freight services. The budgetary allocation towards railway projects has been increased to Rs 2.55 trillion for 2024-25 from Rs 2.40 trillion in the previous year.

For fiscal 2024 (FY24), the company had posted a healthy 30.8 per cent year-on-year (YoY) growth in profit after tax at Rs 246.21 crore. Revenue from operations grew 31 per cent YoY at Rs 2,568 crore.

Analysts expect RailTel to continue demonstrating healthy growth in operating income, aided by its robust order book position. Despite the Indian Railways’ policy shift towards open tenders involving private parties, the company’s order procurement remains healthy as the company enjoys a favourable position in the market, with a well-established network infrastructure and a strong presence in the railway business, according to ICRA.