IRCON, IRFC, RVNL: What Led to Surge in Railway Stocks Today

Railway stocks were amongst the top performers on Monday, even as benchmark indices dipped into negative territory owing to profit booking
Markets
Markets

Railway stocks surged by nearly 16 per cent even as benchmark indices concluded the trading session on a flat note. RVNL (Rail Vikas Nigam Ltd) alone surged by nearly 35 per cent in just 2 trading sessions on the National Stock Exchange. IRFC (Indian Railway Finance Corp Ltd) witnessed a surge of nearly 7.58 per cent on Monday. IRCON (Indian Railway Construction International Ltd) ended the trading session at Rs 326 price level, up by more than 6 per cent.

Both RVNL and IRFC have delivered multibagger returns on year-to-date basis.

Why railway stocks are roaring

Last month, Indian Railways recorded a 10.7 per cent surge in freight loading to 135.46 million tonnes from previous years' 123.06 million tonnes. This uptick contributed to a freight revenue of Rs 14,798.11 crore, marking an 11.12 per cent increase compared to Rs 13,316.81 crore earned in June 2023.

Meanwhile, Railway Minister Ashwini Vaishnaw announced a major expansion plan last week, which includes 10,000 non-AC coaches 2,500 new general passenger trains.

Other Railways stocks have also followed a similar suit. RailTel touched a new 52-week high today at Rs 559, up by nearly 6 per cent, before cooling back to Rs 532 on Monday.

Texmaco Rail & Engineering Ltd. concluded the day at Rs 287 price level, up by 5 per cent on NSE.

Why Benchmark indices were down today

After making new peaks last weeks, both Sensex and Nifty ended Monday's trading session with minor losses. While Sensex closed at 79,960, down by 36 points, Nifty continued to play around 24,300 level.

"The market is turning to a consolidation phase due to the absence of major triggers to support the current premium valuation in the near term, prompting investors to book some profits. The earnings season is around the corner, and the initial expectation is subdued," said Vinod Nair, Head of Research, Geojit Financial Services.

With stable input prices and ongoing price cuts, the period of margin expansion appears to be concluding, which is likely to affect earnings and valuations, he further added.

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