Domestic brokerage firms Elara Capital has upgraded select railway related capital goods stocks including ABB India Ltd, Siemens Ltd and BEML Ltd as the brokerage firm is expecting a decent pick-up in inflow in last quarter of the financial year 2024-25 (Q4FY25) set against a slow start to capex spending in FY25 given elections-led delay.
"Order momentum may pick-up further in FY26, led by new offerings in rolling stock, opportunity worth Rs 4.5 lakh crore in network expansion and large pipeline for Kavach (Rs 45,000 crore opportunity)," said Elara. However, RITES Ltd and KEC International Ltd continue to remain top picks for Elara from this space.
Given that the following stocks have underperformed the Nifty in the past month, Elara has upgraded Siemens to 'buy' and ABB and BEML to 'accumulate' rating due to slower ordering momentum in the private sector.
In FY26, many modernized train sets will be launched for the first time – Vande Bharat Sleeper, Amrit Bharat and Vande Metros. Post the launch, tendering would rise, as the Railways will focus on coach modernization. Also, rolling stock – mainline electric multiple units, Linke-Hofmann-Busch and Namo Bharat Rapid Rail– will be upgraded, said the brokerage firm.
Elara has a positive outlook on India's railway transition led by modernization, upgradation and exports. "We prefer RITES and KEC International in the space. We upgrade Siemens to 'buy' from 'accumulate' with a target price cut to Rs 7,120 (from INR 7,670) on 65 times September FY26E P/E, ABB to 'accumulate' from 'reduce' with target price cut to Rs 6,660 (from INR 7,170) on 65 times (from 70x) September CY25E P/E and BEML to 'accumulate' from 'reduce' with target price unchanged at Rs 4,190," it said.
Elara has retained its 'accumulate' rating on Amber Enterprises India Ltd but raised target price by 4 per cent to Rs 7,420 on 52 times September FY26E. It has a 'buy' rating on RITES with a target price of Rs 365 and an 'accumulate' rating on KEC International with a target price of Rs 1,150 apiece.
The brokerage shall also monitor other plays such as HBL Engineering, Kernex Microsystems, Titagarh Rail Systems, Jupiter Wagons, Texmaco Rail, RVNL, IRCON, Kalpataru Projects, Kaynes Technology, Syrma SGS Technology, BHEL, Concord Control Systems and Quadrant Future Tek. All these stocks are currently not rated by Elara Capital.