RailTel, IRFC to Rites: Not just defence — railway stocks are on a roll too, surge up to 30% in May

Railway stocks in focus: Defence stocks have become a hot segment for Dalal Street investors ever since tensions between India and Pakistan escalated, bringing these domestic-focused companies back into the spotlight and triggering strong rallies similar to those seen during the first half of 2024.

Railway stocks also joined the rally, with most stocks in the segment gaining sharply. Shares of Rail Vikas Nigam, RITES, BEML, Ircon International, RailTel Corporation of India, IRCTC, and Indian Railway Finance Corporation delivered returns of up to 30% in May, as investors responded positively to steady order wins and healthy performance in the March quarter.

Railway stocks had previously experienced a sustained bull run from May 2023 to July 2024, which drove their valuations to unsustainable levels. This, combined with a slowdown in order inflows, led investors to retreat from the segment, resulting in sharp corrections from record highs.

However, the recent pickup in order flow has renewed investor interest, attracting them back into the railway segment alongside the continuing momentum in defence stocks.

RailTel, Rites among railway stocks riding the May surge

Shares of RailTel Corporation of India jumped from ₹312 to ₹384 in May, marking a 30% gain so far — the stock's biggest monthly rise since January 2024. The infrastructure company received a work order worth ₹227.5 million from North Central Railway in early May.

For the March quarter, the company reported a net profit of ₹113.4 crore, up from ₹77.53 crore a year ago, reflecting strong operational execution and improving business momentum. RailTel delivered FY25 profit growth of 27.6%, in line with its guidance of 25–30%.

The Navratna company has reiterated its revenue and profit growth guidance of 25–30% for FY26, supported by robust order inflows worth ₹31.5 billion in FY25.

RITES, a leading transport infrastructure consultancy and engineering firm, has also seen its share price surge 27% in May. The company secured over 150 orders (including extensions) worth more than ₹1,418 crore in Q4FY25, taking its order book to a record high of ₹8,877 crore as of March 31, 2025. In Q4, its net profit rose 6.2% YoY to ₹141 crore.

Ircon International shares have rallied 23% so far in May, driven by consistent order wins. On May 6, the company received an order worth ₹1.87 billion from Kerala State IT Infrastructure. Earlier, it secured a ₹458.14 crore contract from North Eastern Electric Power Corporation for civil works in the Tato-I Hydro Electric Project in Arunachal Pradesh.

In late April, Northeast Frontier Railway increased Ircon's awarded contract size by ₹59.44 crore.

Rail Vikas Nigam (RVNL) shares have delivered a 17% return in May, fueled by steady order wins from Indian Railways. On Friday, the company bagged an order worth ₹116 crore from Central Railway. In mid-April, it had emerged as the lowest bidder for a ₹143 crore contract from Southern Railway.

Indian Railway Finance Corporation (IRFC) has also seen its share price soar 12% in May amid multiple positive developments. On May 15, it received government approval to raise up to ₹100 billion via deep-discount bonds — a corporate debt instrument gaining popularity among state-owned firms.

In late April, IRFC emerged as the lowest bidder to extend a ₹50 billion loan to NTPC. For the March quarter, it reported a net profit of ₹1,682 crore, compared to ₹6,723 crore in the year-ago period.

Other railway-related PSU stocks, such as BEML and IRCTC, also gained 16% and 8%, respectively, in May.

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