These 2 rail-related stocks have zoomed over 75% thus far in Jan

IRFC with market capitalisation of Rs 2.3 trillion today surpassed other state-owned companies like Power Grid Corporation (Rs 2.23 trillion), IOCL (Rs 2.11 trillion) and HAL (Rs 2.01 trillion).

Shares of Indian Railway Finance Corporation (IRFC) at Rs 176 and Rail Vikas Nigam Limited (RVNL) at Rs 320.75 continued their northward bound movement, surging 10 per cent and hitting respective new highs on the BSE in Saturday’s intra-day trade.

Thus far in the month of January 2024, both these stocks have zoomed 77 per cent on expectations of higher budgetary allocation for Indian Railways in 2024-25 (FY24-25).

A sharp rally in stock price of IRFC has seen the company’s market capitalisation of Rs 2.3 trillion overtake that of other state-owned companies like Power Grid Corporation of India (Rs 2.23 trillion), Indian Oil Corporation (Rs 2.11 trillion) and Hindustan Aeronautics (Rs 2.01 trillion).

IRFC was set up as the dedicated funding arm of the Indian Railways (IR) for mobilizing funds from domestic as well as overseas Capital Markets. IRFC has played a significant role in supporting the expansion of the Indian Railways and related entities by financing a significant proportion of its annual plan outlay.

IRFC has signed a Memorandum of Understanding (MoU) with RITES Ltd. The MoU aims for identifying mutual areas of collaboration for expanding IRFC’s role in providing financial assistance to projects/ institutions that have got backward and or forward linkages with Railways and by RITES providing assistance to IRFC in ascertaining the financial & technical viability of projects, providing advisory & consultancy services.

The company has also signed a Memorandum of Understanding (MoU) with India Infrastructure Finance Company Ltd. (IIFCL), a Public Sector Enterprise under the Ministry of Finance, to strengthen cooperation in financing railway infrastructure projects with forward and backward linkages to Railways sector.

Indian Railways are now poised to take transformational leap in the Amrit Kaal of the post-Independence period and fulfill the vision of 'Viksit Bharat' which includes Modern, faster, available on demand passenger services and facilities, a substantial share in freight cargo with ancillary services in logistics parks and domestic industry driven rail infrastructure of highest standards.

A record capex target of Rs 2.60 trillion in 2023-24 is targeted to initiate the necessary changes for this vision, across the entire network. Achieving India's commitment of net zero carbon by 2070; rest in part on more rail-bound passenger and cargo movement, IRFC said in its FY23 annual report.

Meanwhile, RVNL was incorporated to bridge the infrastructure deficit on Indian Railways. RVNL generally works on a turnkey basis and undertakes the full cycle of project development from conceptualisation to commissioning including stages of design, preparation of estimates, calling and award of contracts, project and contract management, etc.

Earlier, this month, REC Limited, a Maharatna Central Public Sector Enterprise (CPSE) under the Ministry of Power, has signed a MoU with RVNL to extend financial support of up to Rs 35,000 crore for infrastructure projects over the next five years. The agreement encompasses a wide spectrum of projects, including multi-modal logistics hubs, rail infrastructure, road development, port facilities, and metro projects that RVNL is venturing into.