Railway shares such as Indian Railway Finance Corporation Ltd (IRFC), Titagarh Rail Systems Ltd, RITES Ltd, Ircon International Ltd, Jupiter Wagons Ltd, Rail Vikas Nigam Ltd (RVNL), Railtel Corporation of India Ltd and Indian Railway Catering & Tourism Corporation Ltd (IRCTC) are in focus today, as stock investors eye 20 per cent higher budgetary allocation to the sector in the Union Budget 2024.
Railways capex is seen increasing 20 per cent growth YoY, led by further expansion of DFCs, rolling stock and HSR networks, as outlined in National Rail Plan. Nuvama Institutional Equities is expecting a robust capex outlay momentum to continue -- 15-20 per cent YoY growth, as the focus shifts to rolling stock, safety, new tracks laying over coming years against electrification in last decade.
Nuvama said it would be positive for players across the spectrum ranging from consultancies to project players and to equipment suppliers.
IRFC shares have rallied 485 per cent in the past one year, followed by RVNL (up 357 per cent),Ircon International Ltd (up 244 per cent) and Titagarh Rail Systems Ltd (up 151 per cent). IRCTC (up 61 per cent) and RITES (up 60 per cent) also gained in the past one year.
"Allocation towards railways at Rs 2.55 lakh crore (5 per cent/5.9 per cent against FY24RE/FY24BE) is expected to be raised with a focus on modernisation, safety as well as expediting of the dedicated freight corridors," Sharekhan said.
The capital expenditure on Railways jumped 77 per cent in the past five years with significant investments in the construction of new lines, gauge conversion, and doubling, Economic Survey 2024 suggested on Monday.
Care Ratings expects 12-15 per cent higher budgetary allocation at Rs 2.75 lakh crore. It sees augmentation of Vande Bharat Trains by 50-60 times; large investments in rolling stock, track construction, and railway safety. Besides, it sees the introduction of hybrid Annuity model for railways capex. PLI scheme for indigenous manufacturing of railway ancillary parts is possible, it said.
As far as investments in rail safety and speed is concerned, InCred expects expansion of the existing railway network, with a focus on safety. It believes that KAVACH safety-related capex is much needed in the current scenario, as no major announcement was made on this in the Interim Budget 2024. "Besides, it expects higher investment in infrastructure projects such as including metro rail and Namo Bharat, which it feels could be expanded to more cities," it said.
InCred, meanwhile, expects a 5-10 per cent decline in the allocation for roads and railways. "While we expect a muted allocation in FY25F, there could be announcements for the next five years which provide the roadmap for the sector," it said.
The Finance Minister Nirmala Sitharaman in her interim Budget speech added that three major economic railway corridor programmes will be implemented. "These projects have been identified under the PM Gati Shakti for enabling multi-modal connectivity," Mehta Securities noted.