Railway stocks: Titagarh Wagons, RVNL, others gain up to 7% ahead of Budget

Jupiter Wagons, Titagarh Wagons, BEML, RITES, Rail Vikas Nigam, IRCON International, IRFC, Texmaco Rail, RateGain Travel and RailTel Corporation are up in the range of 3% to 7% in intraday trade.

Shares of railway related companies have surged by up to 7 per cent on the BSE in Saturday’s intra-day trade, ahead of the Union Budget for 2025-2026 (FY26). The finance minister will present the Budget in Parliament today.

 

Jupiter Wagons (JWL), Titagarh Rail Systems, BEML, RITES, Rail Vikas Nigam (RVNL), IRCON International, Indian Railway Finance Corporation (IRFC), Texmaco Rail & Engineering, RateGain Travel Technologies and RailTel Corporation of India are up in the range of 3 per cent and 7 per cent in intraday trade. In comparison, the BSE Sensex was up 0.26 per cent at 77,701 at 09:42 AM.

 

 

As per the economic survey, the Ports and Shipping, Civil Aviation and Railways sectors were the three infrastructure sectors with the most capital expenditure (capex) allocated in the budget. Till November 2024, they have utilised 76 per cent, 69 per cent and 67 per cent of the allocated budgeted capex. The capex saw an uptick in the July-November period, after the conclusion of the General Election 2024.

 

As per media reports, Railways capital expenditure (capex) is expected to rise by 20 per cent in the FY26 budget. This could raise capex for FY26 to more than Rs 3 trillion, from Rs 2.65 trillion provided in the FY25. As per estimates from the Indian Railways, nearly 80 per cent of Rs 2.65 trillion has been spent till now, and it expects the balance to be spent in the remaining fiscal year. 

 

The higher allocation would be incurred on laying new tracks, upgrading existing ones and buying rolling stock - locomotives, wagons and coaches. The railways will also start Vande Bharat sleeper trains that will have improved comfort for passengers over long journeys. The National High Speed Rail Corp had received Rs 21,000 crore in FY25 and is expected to receive higher allocation for faster infrastructure development on this crucial corridor.

 

Meanwhile, the railways is the largest consumer of wagons in the country. The outlook for the wagon industry mainly depends on demand and budgeted allocation for such outlays. The Government of India is focusing on improving railway infrastructure and ensuring faster development and completion of tracks, rail electrification, rolling stock manufacturing and delivering passenger freight services, according to CARE Ratings.

 

Analysts at Elara Capital expect a pick-up in inflows in Q4FY25 set against a slow start to capex spending in FY25, given elections-led delays (76 per cent of gross budgetary support spent as on 5 January 2025). Order momentum may pick-up further in FY26, led by new offerings in rolling stock, along with opportunities worth Rs 4.5 trillion in network expansion, and a large pipeline for the rollout of Kavach (Rs 45,000 crore opportunities) systems.

 

Since the past three years, the Indian Railways has mostly underspent its budgetary allocation for rolling stock – by 4 per cent in FY22 and 26 per cent in FY23. In FY24, it exceeded its budgetary allocation by 7 per cent, led by heightened focus on increasing the pace of project commissioning, likely ahead of the elections in FY25. However, as FY25 was the year that held elections for the center and various states, it witnessed a slowdown in approvals and project allocations.

 

Per a Press Information Bureau (PIB) release by the Ministry of Railways, as on 5 January, around Rs 40,400 crore was spent, at just 79 per cent of the budgetary allocation for rolling stock. However, the pace of activity is expected to pick up in FY26, with various projects being fast tracked and many new initiatives underway to improve the railway experience for customers, the brokerage firm said in a sector update note.