RVNL, IRFC to IRCTC: Why are railway PSU stocks rising? EXPLAINED

Railway PSU stocks continued their upward momentum on Thursday, with shares of companies such as RITES, RailTel Corporation of India, and RVNL registering gains of up to 7%. The rally in railway stocks came in tandem with a broader surge in the Indian stock market today, as benchmark indices Sensex and Nifty 50 rose nearly 1% each.

RITES share price jumped as much as 7.02%, RailTel shares gained 4.4%, Texmaco Rail & Engineering stock price advanced 3.6%, and Indian Railway Finance Corporation (IRFC) share price rose 2.10%. Meanwhile, shares of Titagarh Rail Systems, Rail Vikas Nigam Ltd (RVNL), and Indian Railway Catering and Tourism Corporation (IRCTC) were up over 1% each.

The sector has witnessed sustained buying interest on the back of improved sentiment, bolstered by a series of government orders and expectations of increased capital expenditure (capex) in the railway space.

The total government capex hit an all-time high of ₹2.4 lakh crore in March 2025, up 68% year-on-year (YoY) and accounting for about 23% of the central government’s FY25 capex. Additionally, quarterly capex reached an all-time high of ₹3.7 lakh crore in Q4FY25, up 33% YoY, representing 35% of the FY25 capex. 

The trend suggests that the worst of the monthly capex slowdown is behind us. In FY26, the government is targeting capex of ₹11.2 lakh crore, a 6.5% YoY growth.

RailTel Order Win

In a recent development, RailTel Corporation of India announced that it has received a Letter of Intent (LoI) from the Motor Vehicles Department, Maharashtra. The order pertains to the design, implementation, operation, and maintenance of an Intelligent Traffic Management System (ITMS) across identified blackspots in the Vidarbha Circle for a period of 10 years.

According to the company’s regulatory filing, the estimated order value is ₹274.40 crore, with the final contract value to be confirmed upon issuance of the purchase order.

Railway Stocks Outlook

Analysts believe that the rally in railway stocks is being driven by the dual triggers of robust government order flows and expectations of enhanced public sector investment, further supported by technical indicators pointing to an uptrend.

The Railway sector’s market capitalization rebounded from its lows, recording a CAGR of 46% over the same period, while its aggregate PAT grew at a CAGR of 15%. According to a report by Motilal Oswal Financial Services, strong order book growth and a recovery in Mid- and Small-cap sentiments have fueled the rerating trends in railway and defence sectors.

“The rally in railway stocks is largely driven by recent government contract announcements and the anticipated capex push. In the current scenario, investors may consider railway stocks that have strong capital investment visibility and are trading at or below their sector’s average price-to-earnings (P/E) ratio,” said VLA Ambala, Co-Founder, Stock Market Today.

Several PSU stocks currently meet these criteria, which is leading to heightened investor interest, Ambala added.

Vinit Bolinjkar, Head of Research at Ventura Securities, echoed similar views. “Railway stocks are expected to perform well in light of the strong capex figures reported alongside the Q4 GDP data,” he noted.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.